6. – Services and General Costs + Strategic Options

  • Functions included in Services and General Costs are understood to be all those that are not a direct part of the production process. It is what is commonly called in organizations as structure. Examples of this group are:

    • General Management, although in some cases it is not included because it is precisely of general nature, and therefore general and productive (both).

    • Human Resources or also called Human Capital Management.

    • Administration and Finance.

    • Strategy Department.

    • Communications abroad or also called Press Service.

    • Legal Advice, which in many cases also acts as the Secretary of the Board of Directors.

    • Internal Audit, which is mandatory in the case of listed companies to ensure the existence and compliance of an internal code of good conduct.

    • Others.

  • Rationalize the size of support functions.

  • Apply a spending austerity policy that makes the majority of expenses (proportionally) be in operational functions. In each company it is different, but it is important to set the general cost burden on the operations.

  • Define the operational actions that are carried out from these functions: distinguish those that are essential from those that are avoidable and dimension the resources that both entail.

  • Analyze which of these functions can be outsourced and which should remain internal to support the core business.

  • Management of non-industrial assets (rental buildings, offices, etc.).

  • Design alternative contingency plans to the general strategy, based on the different challenges and scenarios that may arise.

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