Downsizing Is the Practice of Laying Off Workers in an Attempt

question 175

Essay

Downsizing is the practice of laying off workers in an attempt to decrease average total cost. Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

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Definitions:

Diversification

A strategy to reduce risk by allocating investments or focusing efforts across various financial instruments, industries, or other categories.

Product Development

The process of conceptualizing, designing, creating, and bringing a new product or service to market.

Market Development

Strategies aimed at increasing the market size for a product or service through new market segments or new geographies.

Market Penetration

A measure of the extent to which a product or service is recognized and purchased by customers within a particular market.