Contemporary issues in MHR.
Downsizing
Downsizing, sacking, layoffs, firing and redundancy are many of the terms used when an organisation plans to trim the number of its total workforce.
Unfortuntanately, this has been an all to familiar word for many people, in the wake of the global financial crisis. Hardly a week goes by without been confronted by yet another news of companies laying off employeees or cutting down on costs. Organisations chose to downsize their staff based on various factors, some of which could be external or internal.
The most common reasons are: * mergers & acquisitions-which create excess * loss of market share,strong competition * Low growth rate * Shareholders pressure to increase profits * Econimoic downturn * Bad management
Mergers and acquisitions – A merger is basically when two companies decide to join their combined activities to form one company, in order to create synergies which would benefit both companies. The two combining companies do not necessarily have to be in same industry. An acquisition is the taking or buying over of one company by the other.
Loss of market share- could occur due to stronger competition from new competitors or old competitors.
Low growth rate- The industry could have reached its peak resulting in no future possibility to grow.
Shareholder pressure- When stockholders demand better return value for their shares in the company. A profitable company could still face pressure from shareholders to reduce expense costs which eat to potential profits to the company, which in turn would affect the amount of dividends the company would be able to pay to its investors.
Economic downturn- An economic crisis could be hit home hard or globally as did happen recently.
Bad management- Poor managerial abilities from the top.
Downsizing is often very controversial, as no one