IGCSE, A Level Business Student Forum

Q 26 Analyse why a business may reduce the size of workforce. [6]

Possible Structure:
[KN] External Factors like recession / lower demands
[AN]
[AN+]

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN]
[AN+]

[kn] due to financial challenges by a business
[an] business might ace reducing revenues and cashflows problem so in tht case business will lower the ork force to reduce the labor cost to stabilize its condiions
[an+] the business woul be still competitive and get saved from losing the business

[kn]increase in automatio and technological advancement
[an] thus increase productivity and efficiency and his will also rduce the labo cost of the business and bcz of which business would be likely to invest more and expand
[an+]leads to customer satisfaction and improve loyalty of customers

[KN] External Factors like recession / lower demands
[AN] so to reduce the cost of production the business would reduce the workforce
[AN+] This would lead to higher job insecurity

[KN] Shifting towards capital-intensive / better methods requiring less labour.
[AN] As capital is cheaper than labour they would be motivated to move to capital-intensive methods
[AN+] This could also be done to improve their quality

=== Moderator Comment ===
@Ibrahim Aamir : Improve the 2nd AN, AN+

[KN] External Factors like recession / lower demands
[AN] In times of recession many business face a fall in sales due to the rise in prices
[AN+] The business may not be able to accommodate all its workers because of the low sales and revenue and may decide to layoff workers

[KN] Shifting towards capital intensive / better methods requiring less labor.
[AN] Advancement in the technology of business and a shift towards capital intensive machinery may lowering cost of production and work faster reducing the need of human labor
[AN+] Businesses may want to achieve a higher revenue and reduce workers to lower labor cost

[KN] External Factors like recession / lower demands
[AN] The business may be in a hard position in terms of sales hence keeping workforce will do no good rather increase costs, hence reducing it is the best option.
[AN+] Thus it is possible that the business still survives in such condition hence when the situation will be back to normal the firm may increase the size of workforce.

[KN] Shifting towards capital intensive / better methods requiring less labor.
[AN] Hence chances of mistakes will be reduced and productivity and efficiency both will increase as compared to manual work.
[AN+] As a result alot of time will also be saved too hence fostering the culture of growth in a sustainable manner.

[KN] External Factors like recession / lower demands
[AN] this is because they could not afford to keep workers which further reduces their output
[AN+] this causes for brand image to deteriorate

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN] this could improve the quality and reduce labour costs
[AN+] this reduces costs of the business as well as improving its quality and sales thus market share increases

[KN] External Factors like recession / lower demands
[AN] When customers spend less or demand for products or services declines, businesses experience a decrease in revenue.
[AN+] This can strain their financial resources and put pressure on profitability.

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN] Capital intensive methods and automation can significantly improve productivity and efficiency by reducing the need for manual labor and repetitive tasks.
[AN+] Workers need to adapt to the changing demands of the labor market, requiring reskilling and upskilling initiatives to enhance their employability.

[KN] External Factors like recession / lower demands
[AN] reduced production
[AN+] extra workers are an extra cost

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN] better production methods increasing efficiency
[AN+] quality assured products / services

[KN] External Factors like recession / lower demands
[AN] This means that the business cant not afford to keep workers.
[AN+] This lead towards a fall in brand image.

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN] This would help to better the quality and reduce labour costs.
[AN+] This would lead towards attracting more customers through its quality.

[KN] External Factors like recession / lower demands
[AN] During economic downturns or recessions, businesses may reduce their workforce to align with reduced demand and lower revenues.
{AN+} Workforce reductions in response to economic challenges can lead to a decrease in consumer confidence, as well as a potential loss of institutional knowledge and skills that may be challenging to recover when the market improves.

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN} Automation and technological advancements may render certain job functions obsolete, prompting a reduction in the workforce.
{AN+] While automation can lead to increased efficiency, it may also result in a skills gap among the remaining workforce. Companies need to invest in retraining or hiring employees with the necessary skills to manage and maintain new technologies.

[KN] External Factors like recession / lower demands
[AN] during economic instability when a large workforce is not needed
[AN+] as it just leads to costs for business

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN] technological advancements not requiring many employees regarding the businesses nature
[AN+] would lead to better quality of output for business with increased revenue

[KN] External Factors like recession / lower demands
[AN] as there is less demand of the products the business fired the employee so that their cost can be low
[AN+] this help to use that money to make product more qualitative so that some sales could be generated

[KN] Shifting towards capital intensive / better methods requiring less labour.
[AN] as machine can produce double the amount of what labour can produce a day
[AN+] so more output can be produce in less time and economies of scale can also be achieved

=== Moderator Comment ===
@Hussain Asghar Update your 1st AN+, 2nd AN & AN+.