The first cost to be cut from companies nowadays is the entertainment budget. That’s right, the days of eating tenpanyaki and drinking expensive sake and the nights of visiting expensive hostess clubs in Kitashinchi are over. Another unfortunate thing that usually has to go is the company English lessons. Some companies spend a lot of money sending their employees to eikaiwas for private lessons and when the economy is down, learning English is usually one of the first things to go.
The next cost cutting strategy is to lay off the temporary and part-time workers and cut overtime. In Japan, the company has to prove its financial situation to the Ministry of Labor in order to lay off employees. However, many companies don’t like to do this because then it is public news that the company is having financial troubles. Therefore, trust in the company’s products goes down and they are likely to lose clients. So usually, unless it’s a dire situation, only the part-timers are cut. This is one way for company’s to reduce their variable costs. Variable costs include employees’ salaries, number of workers, materials and delivery costs, etc.
In a financial crunch, it’s best for companies to reduce their variable costs and focus more on fixed costs. Fixed costs are those that remain the same regardless of the company’s sales. Some examples are rent on an office building, insurance, etc. The 3rd thing that is cut from the budget is business trips. Hello Skype, web cams, email, and the good ole’ handheld telephone. Telephone and video conference meetings are more popular than ever with the financial crunch and the tightening of belts recently. As with Company X, they saved 2 million dollars a month just by cutting the costs listed above. So it seems that we could probably all take a page out of their book to get control over our money these days but it seems like no matter what we do, it’s going to affect someone.