- April 7, 2020
refers to the reduction of the size and costs of an entity and theredesign of the work processes with a primary purpose of regeneration(Cooper et al., 2012). There are three forms of downsizingapproaches, which include reduction of workforce, redesign oforganization and systemic. Nevertheless, the most common form ofdownsizing practiced by different organizations is mitigation of thenumber of employees or layoffs. The chief reason for carrying outdownsizing in an organization is to enhance the financial as well asthe overall performance of a company (Cooper et al., 2012). Becauseof the merit associated with downsizing, different firms either largeor small have been seen to be involved in the practice. The followingis a discussion of downsizing presented in an article.
Thearticle, Stoll, D.J. (2016, Nov. 9th).GMto Cut Production Shifts at Michigan, Ohio Plants. TheWall Street Journal,talks about the downsizing of General Motors. According to thearticle, General Motors Company intends to engage in downsizingthrough laying off 2,000 employees at its car assembly center in Ohioand Michigan. The downsizing is scheduled to take place in the firstquarter of 2017. The article indicates that the company has seenstrong demand for pickup trucks as well as sports utilities amidinexpensive gasoline, but passenger automobiles such as Cadillacsedans and Chevrolet Cruze compact have faced struggles amid thechanging tastes of consumers. The reason why the company wants to beinvolved in the practice of reducing the number of workers is becauseit desires to achieve a decrease in the production cost. From thearticle, it is apparent that the organization has been mitigatinglow-margin sales to rental car entities, which are usually a dumpingground for vehicles that retail buyers do not want (Stoll,2016).Cutting of the production costs seems like the only way of addressingthe problem of rising inventories.
Accordingto the author, the company intends to realize downsizing throughsuspending the third production shifts of both Ohio factory andanother unit in Michigan. The suspension of the third productionshifts would ensure that the firm reduces its production costs sinceit would not incur the costs of paying the employees who would belaid off. Currently, the company experiences have realized a declinein sales, which makes it think of downsizing as a solution. Thearticle claims that the sales for the company have declined by 3.6%during the year, which is higher than the decline in the entiremarket (Stoll,2016).
Thearticle records that the bullish production schedule threatens toresult in an inventory balance, which would require even higherincentives compared to what has been offered. The company is reportedto have 84 days’ supply of unsold inventory on the United Statesdealer lots. The General Motor’s inventory levels are considered tobe above the industry average level of 73 days’ supply.Furthermore, the article indicates that it is not only General Motorsthat has considered downsizing, in the auto industry, since Ford andChrysler have already considered the move in the second quarter of2016 (Stoll,2016).
Inconclusion, downsizingrefers to the reduction of the size and costs of an entity and theredesign of the work processes with a primary purpose ofregeneration. The most commonly used form of downsizing is laying offworkers. This is the case in Stoll’s article, where General Motorsanticipates reducing its workforce by 2,000 workers.
Cooper,C. L., Pandey, A., & Quick, J. C. (2012). :Is less still more?.New York: Cambridge University Press.
Stoll,D.J. (2016, Nov. 9th).GMto Cut Production Shifts at Michigan, Ohio Plants. TheWall Street Journal.