Employment Downsizing and Its Alternatives

When the quarterly figures have come in, and they show that yet again sales have dropped, you get that shrinking feeling. But what to do? If employment is downsizing and you may soon be out the door, you may wish to consider alternatives. We have three suggestions below that may be worth looking at before the employer push arrives.

Buy a Small Business

Look around in your industry to see if you can snap up some small growing businesses. Often, they are businesses sitting on patents and products that are new and exciting. However, they can’t exploit these opportunities due to size or poor management. On the other hand, your business should make the most of these new products, which will help fill in your existing product line gaps. An example of this strategy is Microsoft, which buys about six small businesses a year. For instance, in the mid-1990s, when Bill Gates suddenly became aware of the internet, Microsoft purchased Hotmail. Microsoft needed an email service to be part of its internet portal and quickly. Recently they acquired Skype, as they perceive the VOIP market to be necessary to their customers. It’s this constant acquisition that has kept Microsoft from going stale.

In-House Product Development

Another thing you can try is developing new products in-house. Usually, shrinking sales indicate a product reaching the end of its life – you may be the market leader, but markets become saturated because customers have moved on. One way to deal with this natural attrition is to ensure you have a constant stream of new products coming online to replace the old ones. An example of a company that does this is Procter and Gamble. Their core product is washing power, but this is difficult to grow as it has reached its natural limits – even Procter and Gamble can’t persuade people to change their clothes three times a day and do three times their average laundry load!

They’ve solved this by launching a stream of related products, hoping to create new markets. Developing new products can be cheaper than acquiring small businesses if you already have an established research and development department in your company.

If your existing market is saturated, another thing to try is selling your product in other markets where competition is less fierce or even non-existent. This is the strategy adopted by McDonald’s. They can’t pack any more outlets per square mile in the United States without cannibalising the profits of existing franchises, but they can expand into other countries. Their greatest successes have come from opening outlets in countries with no burger restaurants and little competition for fast food.


Finally, you can try considering joint-ventures with other companies in your industry. That way, you can pool research and development costs and achieve economies of scale. One downside of joint ventures is that you have to share control. Executives in each company will often thwart the venture’s success because they don’t want to cede turf. Successful joint ventures usually end up as full-scale mergers.


The main point is looking for employment alternatives before the downsizing starts – while you have the time. Of course, another job with another employer is perhaps alternative number four. But we notice downsizing often hits similar employers simultaneously, so another job is a choice you may not have.

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