Corporate Downsizing

Essay by EssaySwap ContributorUniversity, Master's February 2008

download word file, 5 pages 5.0

Corporate downsizing now affects every type of business industry - including, but not limited to, technology, education, government, transportation, and telecommunications. Downsizing has become a very controversial issue in the past few years based on the reasons that downsizing takes effect, how it is implemented by the organization, and what steps are taken to enhance the effects on the organization's performance. Some companies downsize due to technological advances, such as automation, which reduces the need in workforce numbers for production numbers to be met. Other organizations may feel that in order to compete with other organizations, the reduction in workforce will help them to get further ahead. Still, other companies downsize because of financial problems that are related to things such as loss of revenue, drop in customer demand for a particular product or service, and dips of stock value in the economic market. Where will the job cuts end? One thing that, in my opinion, has resulted in massive job loss is the founding of the North American Free Trade Agreement (NAFTA), which was established as a universal trade agreement between the United States, Canada, and Mexico to all free imports and exports.

The agreement, while helping poor countries like Mexico, to export their products to build their economy, has in turn had an adverse effect on the United States. Organizations that have experienced revenue loss or other financial setbacks or losses have realized that they can downsize their workforce in the United States, move their operations into countries such as Mexico, and hire workers that will work for nearly nothing, and still export their products back to the United States. Doing this allows for them to make a much larger profit than paying American workers to produce their products; therefore, they downsize or close their organizations here in...