Cost Structures in Organizations: A Strategic Paradox

Cost-cutting has been a common means in efforts to improve a firm’s ‘bottom-line’ during times of declining revenues, despite the evidence that cost-cutting has generally produced mixed results on profitability. In this paper, cost structures in firms are conceptualized as being a strategic paradox created by concurrent opposing forces which necessitate the firm to give consideration to simultaneously increasing and decreasing the cost structure. These pressures are explored via a classification of cost-programs to address alternative cost-pressures faced by firms.