Downsizing in a Company

The goal of every company is to make a profit. The private, public, and non-governmental companies aim to increase their profit by reducing production costs and maximizing revenue collection. Factors of production are critical in the production process. Firms must use energy, workforce, and raw materials in the production process. All these resources amount to what are considered factors of production. The more the firm spends on these factors, the more their cost of production increases, and this aspect risks the profits realized in the company. Generally, the cost of production increases significantly to match the revenue and profits realized in the company. If the company does not take collective measures, the cost of production may match the revenues and profit generated and, in the worst-case scenario, increase beyond the profits realized. In such cases, the company is said to be making losses. If the firm has no alternative sources of revenue or the investors are unwilling to invest in more resources, the company ceases operations naturally. Companies can, however, initiate several measures to prevent the case scenario, including downsizing to cut the cost of production. This paper focuses on such a case by considering a manufacturing plant with two plants, five sales offices, and a head office located at different localities and embarks on capacity reduction in the next two years by shutting down two sales offices and one plant. The main aim is to establish the firm's goals as it downsizes, the best strategy during the course, and the best socialization program during the course.

Five Corporate Goals of the Company

Cutting the Cost of Production

Cost of production refers to the resources a company or an organization must use to produce its product or services (Hayes, 2022). An example is that a bread-making firm must use wheat flour, water, yeast, preservatives, electricity, and workforce. The money the firm pays these entities to produce the bread is the cost of production. The firm in the presented case must be facing unfavorable market factors and must consider reducing its production cost and seeking new markets in neighboring countries. It is, therefore, the desire of the management to reduce their operational cost. The ability of the firm to reduce the operating cost may give them an upper hand against their competitors and use this element as a competitive advantage.

Maintaining Customer Loyalty

Although the company is downsizing, it needs customer loyalty. Customers are a critical element in any company as they are the source of revenue. The ability of the company to maintain its customers and increase their loyalty determines success. A downsizing company needs customers' loyalty more than a company operating in a normal capacity. This is because the reduced workforce may negatively impact the production process, thus hurting customers' interest. The interventions may also make the company lose critical talent, affecting product and service quality. Loyal customers can, however, maintain their customer base despite the challenges.

Preventing Employee Turnover

Employee motivation is a critical factor in company operations. Most companies practice division of labor and specialization, where an employee focuses all the input in one production area. Downsizing will likely interrupt this aspect as employees in different production points are sent packing. The effect is that the other employees must readjust to fill the resulting gaps. Although the management may lay down an excellent strategy to enable the transition, some employees may be unwilling to adapt to the new roles, which may prompt them to leave. It is the goal of the company to prevent this scenario because although they need to reduce the workforce, they must retain a sufficient workforce to maintain the company's operations.

New Market Venture

The manufacturing organization faces challenges due to the entry of a new firm in the current market. This entrance guarantees products with new features and performance in line with the customers’ demands. The effect is reduced sales and profits of the company in the market. Investing in the same technology may take some time and............................