Rationalisation of resources - Strategic Management

Another aspect of the study, particularly in companies with many sites, is whether facilities of plant or buildings can be rationalised or relocated. Where two plants or two office buildings can be amalgamated into one, considerable cost savings may frequently be obtained. A similar approach should be applied to distribution depots: many companies have made a substantial impact on their profit position by drastically reducing the number of depots operated.

A company with plants located in different countries should re-examine its supply and demand patterns. Perhaps a particular plant should be closed or the source of supply to a particular importing country changed. International studies such as this are invariably complex and involve more than factory cost comparisons. Marginal costs should be considered, the effect of change on fixed overheads, investment requirements, and differing tax liabilities. There may also be legal problems to be considered where profits are, in effect, transferred from one legal entity to another.

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