Some good evidence in this HBR blog article about downsizing - a term commonly associated with the strategy of retrenchment. The article refers to a recent piece in the Wall Street Journal predicting that many already “lean” and successful firms are considering further retrenchment as they aim to cut costs and streamline their operations.
The HBR blog outlines some possible downsides of such retrenchment. These are good arguments to use in an essay when analysing and evaluating whether retrenchment is the right strategy for a firm that is struggling.
The key points are:
- Downsizing often leads to worse, not better, financial performance
- Downsizing damages the working environment in the firm, adversely affecting the morale and motivation of those left behind, which in turn can lead to lower productivity and creativity.
- Employees who are retained (i.e. not laid off) have lower loyalty to the business, resulting in a risk of higher staff turnover amongst employees that the business wants/needs to keep
A similar argument to the above is made by Freek Vermeulen of the London Business School.
Vermeulen quotes from Fortune Magazine which commented firms that downsize, who:
“rather than becoming lean and mean, often end up lean and lame.”
We'll use this Series to curate resources that support teachers and students preparing for the BUSS4 Section A Research Theme on Manufacturing in the UK (June 2015). These resources will complement our popular BUSS4 Section A Toolkit on Manufacturing and the BUSS4 Exam Coaching Workshops which also include sessions on Manufacturing.
This resource comprises a complete collection of editable worksheets that that enable students to practice all elements of the quantitative and data analysis skills required by the Year 1 (AS) teaching content.