Downsizing Has an Immediate Effect on Costs,and Much of the Evidence

question 4

Multiple Choice

Downsizing has an immediate effect on costs,and much of the evidence suggests that it:

• A)increases profitability in the short term.
• B)promotes future competitiveness.
• C)hurts long-term organizational effectiveness.
• D)increases the motivation of remaining employees.
• E)none of the choices are correct.

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Definitions:

Industry Entry

The process of a new competitor or business entering into a market or industry.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices at a given time.

Long Run

That period of time for which there are no fixed factors of production: Firms can increase or decrease the scale of operation, and new firms can enter and/or existing firms can exit the industry.

Profit-Maximizing

The process or strategy of adjusting production and sale operations to achieve the highest possible profit.