CAUSES AND CONSEQUENCES OF COST ASYMMETRY

The operation of businesses and organizations in a demanding environment requires a dynamic management by their administrations so that they can cope with the constant changes in market conditions. In order for companies to survive and evolve, they need to adapt their production process to changes in demand, but also against their competitors. In this subject, the bibliography has been focused on the management's asymmetric response to an increase in demand against a potential fall in demand, contrary to the traditional theory of symmetric cost changes. Many researchers have found that there are some distortions that hamper the symmetrical reaction of administrations to changes in demand, especially in the case of a reduced demand, and named the phenomenon as cost stickiness. The root causes of this phenomenon are identified in managerial decisions, the production structure, some external factors and various adjustment costs. Moreover, it needs to be stated that such a phenomenon may be caused only by deliberate actions of the administration. The cost stickiness and its causes vary between different industrial sectors and/or different countries.