![]() Instead, they are shared across the company and are largely fixed. By indirect costs, we mean those separate from the direct process of manufacturing goods or offering services. ![]() Traditional cost-optimization approaches are yielding diminishing returns if revenues begin to fall, then, so will profits.ĭrawing on the latest McKinsey research and a series of interviews with experts and industry leaders, we believe there is a way to do better, faster: tech-enabled rapid reduction of indirect costs. Since then, the trend has reversed, with G&A expenses rising faster-15.4 percent compared with 6.0 percent revenue growth. From 2008 to 2015, G&A expenses grew more slowly than revenues (41.8 percent versus 61 percent). Specifically, many companies are seeing the share of general and administrative (G&A) costs increase. ![]() However, regardless of the larger economic environment, companies can take actions that can help. Maintaining profits and growth is going to be very difficult. Profitability in the automotive and other industrial sectors has been strong in recent years, but global economic growth has fallen from 3.1 percent in 2017 to an estimated 2.6 percent in 2019, and 2020-due to the coronavirus pandemic-will most likely see a global recession.
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