A Downsizing Strategy at City Corp

question 57

Multiple Choice

A downsizing strategy at City Corp. has resulted in negative stock returns and lower profitability following the layoffs. Which statement best explains the reason for these negative results at City Corp.?

• A) Downsizing tends to eliminate good performers instead of poor performers first.
• B) Downsizing demands the HR department have a third-party vendor provide services, which results in lower revenues.
• C) Downsizing conducts a complete review of the organization's critical work processes, which results in heavy expenditures.
• D) The HRM of a firm must provide downsized employees with multiple stock options.
• E) When labor costs fall after a downsizing, sales per employee also tend to fall.

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Definitions:

Trade Permits

Legal documents or licenses required to engage in certain types of trade or business, often used to regulate or protect industries.

Pollution Reduction

Pollution reduction refers to strategies and activities aimed at decreasing the amount of pollutants released into the environment.

Government Caps

Limits or regulations imposed by government on prices, rents, or quantities that can be charged or supplied in certain markets.

Marginal Social Benefit

The additional benefit to society as a whole from the consumption or production of one more unit of a good or service.