Corporate Strategy of Downsizing: Definition, Nature and Types

In the mid-1970s, Chales Handy – a professor of management psychology at the London Business School, predicted a revolution that would potentially change the entire economic market by pushing thousands of firms into the situation that he calls “downsizing”. This phenomenon was ignored at that time (Dening, 1996), but has increasingly come true, and

Retrenchment as Corporate Strategy of Downsizing of the firm

Retrenchment is a downsizing strategy, in which the firm concentrate or specialize in one or some particular SBUs. The strategy implementation consists in selling, rebuilding or eliminating complementary and unnecessary SBUs apart core ones of the firm. The ultimate objective of retrenchment aims to gain or regain the competitive advantage and economies of scale,

Downscaling as a corporate restructuring strategy of the firm

Downscaling, as one of downsizing strategies, involves permanent changes in employment size and tangible resources of the firm. In fact, a decrease in tangible resources is synonymous with reduction in the workforce associated; thereby allowing firms to easily survive and enhance their competitive advantage in the market. The majority of firms adopt the downscaling

Downscoping strategy of the firm

Downscoping is one of downsizing strategies, in which, firm divests their capital from some existing SBUs, some market segments or business fields, that are often vertically or horizontally integrated into its supply chain, in order to re-focus on its core business. Downscoping strategy consists of two main processes. First, firm divests from non-core businesses

Challenges facing firms when implement downsizing strategies

When deciding to downsize, firm will face many challenges, including: Survivor syndrome emerges in firm as result of workforce reduction. The rest of the staff may feel their futures uncertain when their colleagues, possibly better than them, are fired. They may always fear their turn to be fired, thereby losing their motivation at work.

Downsizing strategies in pharmaceutical industry

Face to economic crisis, rivalry and rapid technologic evolution, many large pharmaceutical firms adopted the corporate strategy of downsizing by laying off a great number of employees (Essays, 2018). In 2007, because of economic crisis, nearly 80,000 workers lost their jobs; several mergers took place such as Merck-Shering, Pfitzer-Whyeth and Roche-Genentech. Other pharmaceutical firms

The downsizing strategy of General Motors

The General Motors Company is an American multinational automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and was the largest in the world for 77 years before losing the top spot to Toyota in 2008. General Motors operates manufacturing plants in eight countries. Its