While periods of economic instability are not unusual in today's global marketplace, this year's turmoil seems particularly challenging for companies all over the world. Sharply higher prices of food, oil and other commodities, a falling dollar, tightening credit conditions and plunging stock market prices have been accompanied by warnings that the world's major economies are to confront a new era of unusually difficult challenges. Such volatile economic conditions are making it difficult to achieve business objectives and execute plans. Faced with the most unprecedented economic conditions in living memory, the issue of improving the financial position of a business has become a challenge for everyone, and hence, major projects and expansion plans are being reviewed by the corporate sector and they have started focusing on their cost management strategies, which seems to be the key to the survival and success in the current turbulent economic scenario.

Leading economists have recognized the current global financial meltdown as the worst, since the one related to the Great Depression. It also contributed to the failure of key businesses, declines in consumer wealth, substantial financial commitments incurred by governments, and a significant decline in economic activity. Analysts are trying to find out the causes and solutions, and as a result, both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy. How and where to start? What should be done first? Does the order matter? Or should everything be done at once? These are the common questions that rise in the mind of every executive. The outcome of the crisis like money devaluation, inflation, reduction of remittances, downturn in business cycle, deficit current and capital account balances, reserve problems, reduction of export earnings, unusual closer of business and so on, has made the global economy as a whole to sail through highly turbulent times, such that no one knows what will be the exact size of the impact when will the economy recover. Consequently, it has become imperative for companies to understand and apply the right strategy of cost management, as effective implementation of cost management strategies will translate into reduced costs of production for products and services, as well as increased value being delivered to the customers, which is the key to survival and success in these challenging times.

We are passing through a global economic crisis of very severe proportions. In this situation, managing business has become more demanding as market conditions are tough or uncertain. Difficulty is faced in planning things because of uncertainty with respect to product prices, sales volumes, cash flows, recoveries, as well as the number and volume of orders. The pace of business has slowed down and there is a lot of discussion about an economic recession. It becomes very essential under these conditions to hold one's nerve and desist from looking at solutions which may prove to be worse than the problem itself.

Each new approach to cost reduction is based on lessons learned in the past. At the same time, each approach must be forward-looking, developing new perspectives that reflect current market conditions and, more specifically, recent changes in cost structures. Therefore, companies should ask how the current economic downturn will shape today's cost reduction approaches and how they can move beyond the tried and tested methods of previous eras. The first step is to understand how this recession is different from previous downturns. We also need to consider what elements of a company's cost structure have changed the most since the last recession.

Accounting World Magazine, Cost Management Strategies, Economic Crisis, Cost Management, Cost Reduction, Economic Recession, Financial Commitments, Cost Management Techniques, Cost Management Programs, Economic Evaluation, Health Insurance Policies.