Mar 03 2009

Recession’s effects on small vs. large companies: some evidence in support of the Classical view of self-correction

90 responses so far

90 Responses to “Recession’s effects on small vs. large companies: some evidence in support of the Classical view of self-correction”

1. # Marc Lemannon 04 Mar 2009 at 9:20 pm

   Larger corporations probably lay off workers instead of shutting down whole factories, because workers are not a long-term investment like factories; companies that lay off workers can keep all their plants open, and make them more efficient, and if they have to hire again, it is much less complicated than re-opening a factory.
   Companies that are publicly traded face more problems during recessions, because they are supposed to take all actions, on behalf of what is best for the shareholders, which puts pressure on companies to reduce as many cost as possible to satisfy the shareholders. Smaller or privately owned businesses do not face these problems, because they do not have this pressure of satisfying the shareholder.
   I believe that after the recession people will be working for smaller companies at first, because they will have been hired by the smaller companies that were in search of talent, when many people lost their jobs. But gradually, the “self-correction” model will also attract people back to the larger corporations, which pay more for the talented workers. There are pros and cons of working at either smaller or larger companies, but I would rather work at a larger corporation, because of the better known name of the company, and because of the higher wages. Having a well known company name is also beneficial in getting talented workers; it works just like having a known brand. An example of this is Google, their workers have many benefits (live on campus for free), and with this, and their well known name, they are able to attract the best workers.

2. # Helen Poxonon 05 Mar 2009 at 4:22 am

   I think that Large companies lay off their workers instead of closing down their factories because by cutting down the amount of workers they will have less costs to pay. Therefore they reduce their costs in proportion to the reduction in there turn over. This helps to maintain their profitability. This might only hold out a couple of months but this could lead to them gaining some profit instead of none at all. As mark said it is also less complicated to keep them open so that they can try and get themselves as a company to a efficient level so that if they do want to start hiring workers again its less complicated for them.
   In times of recession all companies face problems such as; not being able to generate enough revenue to cover their costs. Publicly listed companies face the most problems during recession because as things start to slow down they have to move quickly if they are to prevent their costs out weighing their revenue. Publicly listed company have to work within rules and regulations with respect to laying people off. Smaller companies that are not publicly listed can move much quicker as they are normally laying off less people not governed by the same rules and regulations. At the same time publicly listed companies have to please shareholders who are less willing to continue to provide their capital if they see that a company is having problems maintaining its profitability. During recession if a publicly listed company loses money this will reduce its capital base and therefore its solvency ratio. Privately owned and smaller companies are the opposite to this because as Mark says they do not have to satisfy shareholders.

   I think that when the recession is over and both smaller and larger companies have survived that more people will go back to working for the bigger companies. This is because larger companies can provide more opportunities and incentives for people. Also people will generally perceive larger companies as providing greater security and long term survival. As the article states that smaller companies do better during recession because they are able to get hold of talented workers who are currently jobless but once the doors of more money and better opportunities occurs workers leave smaller companies for larger. I’m not really sure if smaller companies are going to do better after the recession i think they might for the first year or two but once workers know for certain that the recession seems to be over I think they will go towards the larger companies. As the article states the government doesn’t seem to interfere with the recession because it will eventually “self-correct”. I think that I would rather work for a larger company because it gives you more incentive to work. A job in a large company is more of a long-term opportunity than one in a small company.

3. # Nickon 05 Mar 2009 at 9:19 pm

   The answer to number one is simple, it is because in the short run their is only one variable resource and that is labor. They are unable to shut down factories and sell capital as they would only be able to do that in the “variable” plant period, as at the moment the resources are fixed into the productions of those goods and services. large public companies that are listed on stock exchange market would be first hurt in times of recession as they rely on the selling of stock. stock is a form of investment in a company. if you are buying stock you are almost investing in a company, therefore if people begin to sell their stock they are effectively taking money out of a company. Privet companies have actual investors, maybe one or 2 separate individuals that count for a large amount of money supply in the company. I would rather work for a small company, this is because you are more informed and contracts are often better in small firms and safer.

4. # Christian Evertzon 13 May 2009 at 3:51 pm

   1. Due to a decrease in demand, a company has to reduce supply in order to cut production costs. In the fixed plant period however, which is the period where plant size is fixed, the company can only adjust its varibale resources such as labour. Thats why laying off workers is the first thing companies due when they experience a decrease in demand.

   2. A publicly traded company is owned by many investors who ideally expect high returns from the stocks they buy. In a recession, they fear that the value of their stocks decreases and therefore in some cases withdraw their investment from the company. Furthermore, the publicly traded company will face a public dispute with unions if they want to lay off workers.

   3. When the recession is over, small companies are able to higher a lot of workers, since unemployment is quite high and the workers are willing to accept lower wages. However as stated in the article, when the economy is at full steam again and the labour market is tight, then large companies have the advantage of offering higher salaries to workers so that they can lure them away from small companies.

5. # Gabrielon 13 May 2009 at 3:52 pm

   Corporations lay of workers before they lay of land or capital because it is the fastest way of getting rid of cost, this is why it is called the short run or fixed plant period. There is not enough time for firms to sell land or capital but they do have enough time to lay off workers or decrease productivity by granting less hours.

   In a recession a publicly traded company has a lot more pressure because of the fact that they sell stocks, therefore they are basically owned by a lot of investors. If they are losing their stock money then they will obviously not be happy. The company will be forced to face a fall in demand, because investors and consumers involved with that company will see the decrease in value and will not be as willing to consume or invest.

   After a recession is over smaller firms tend to higher workers faster than big firms for several reasons. Firstly there are many more of them, and it is easier for unemployed workers to find them. Secondly they are willing to accept lower wages. Once some time has passed, then large firms will have an advantage since they will be able to offer higher wages and attract more workers towards them.

6. # Theresa Mehlon 13 May 2009 at 4:20 pm

   Why is laying off workers the first thing big companies do when faced with falling demand for their products?
   A firm’s goal is always to maximize their output. When aggregate demand for the products in the economy falls, the total spending on goods and services declines. A fall of aggregate demand will shift the curve to the left which will signify decrease in real output. When is demanded in an economy, therefore less is produced. When production declines, less has to be produced. Therefore less workers are needed. Companies will therefore lay off workers when falling demand occurs.
   Why don’t they shut down factories instead?
   If they shut down the factory the factory in harsh times, no profit will be earned. Also, like Marc said closing and reopening are complicated processes. As unemployment in recession is very high firms can be sure that after a recession is over the spots will be filled again. Therefore when aggregate demand will rise again and firms will supply more, they will employ these workers again.
   What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
   Publicly traded companies want to satisfy their shareholders which are only interested in their stocks if their profit of these shares remains great. Therefore the pressure of firms to stay in profit is greater than of firms that do not have these shares. The great firms will be worth much less if they loss their shareholders. Small firms therefore do not have this pressure influencing their decisions during a recession.
   When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
   Like Mark I am the opinion that more people will be working for smaller companies when recessions have occurred, since like the article stated “it’s easy for these firms to find good workers while unemployment is still high—and easy for workers to come across small companies since there are so many of them”. But of course in the long run process, when the economy will have fixed itself these once dismissed workers will be employed in the larger companies again.

7. # Maren Rackebrandton 13 May 2009 at 7:23 pm

   When the demand of a product falls then companies reduce their supply of the product, because less is bought. When less output is produced, less workers are needed for the production of these goods and therefore workers are laid off. Also due to the less demand the firms get less money and as a result can’t pay the wages for all the workers.
   The goods still should be produced, just in smaller amounts. So the facotries can’t be shut down. Also it is easier for firms to cut on their workers rather than closing factories. After a recession it is easy to employ people, but it might be complicated to reopen a factory that was shut down.
   A publicly traded company has many investors, due to the sold stocks. In times of a recession those stocks go down and the more the stocks fall the more likely the investors sell them to get as much money as possible. So when all the investors sell their stocks the company has no money left and therefore is likely to become bankrupt. Small companies on the other hand do not have as much investors and therefore are not as likely to become bankrupt as big firms.
   I think after a recession more people would work for small companies than before, because according to the article small companies hire workers even during a recession because big companies laid off these workers who might be workers with good skills. It is hard to say which one I would rather work for a big or a small company, because they both have good and bad sides. The big companies might have higher wages, so it is more attractive to work there. On the other hand during a recession there’s a great possibility that you get fired. A small company might not have as high wages, but during a recession the job that you have is pretty “save”, because it does not affect the small companies as much.

8. # Aleya Thakur-Weigoldon 13 May 2009 at 11:37 pm

   1. In a recession the demand for certain products usually decreases which means that the companies will have less profits. They will have less profits but not none, this means that they can still afford a certain number of workers but maybe not as many as before. This is the reason why companies start laying of workers but they won’t shut down completely because there is always a glimpse of hope that the economy will recover (like it usually does).

   2. Small companies are usually not as involved in public trade but they concentrate on their personal benefits, whereas bigger companies have many other parties involved in their business. In times of a recession the stocks that these big companies hold might loose their value which forces companies to sell them as quickly as possible. In a recession this is not always possible though, because few people are willing to buy worthless stock. Small companies won’t have this problem because they do not hold so many stocks.

   3. It is hard to say whether more people will work for small companies or bigger companies. According to the article the economy will recover because smaller firms will start hiring people again because there is a higher supply of skilled workers, this will reduce unemployment and larger firms will start hiring more people as well. At first more people will be working for smaller and privately owned businesses but once the economy is up and running again, more people will start working for larger companies because they can offer more. I am not sure if I would rather work for a small company or a big corporation, if I had gotten a job in a smaller company I would probably stay there unless I got a better job option in a different company.

9. # Laura Perezon 14 May 2009 at 12:44 am

   1) A pubicly traded company has more trouble during a recession because it has to struggle to maintain the high wages they offer their workers while a small firm does not have as much pressure in this area. This is because they normally offer lower wages and with the recession comes lower price levels. Workers will be more attracted to a smaller firm with its wages rather than the lowering wages of a large firm. During recession, people do not want to spend and instead start saving their money. A pubicly traded company will suffer during times of recession because the public is scared to invest since they do not trust the economy. This company will not get a lot of investors during these times because of the lack of confidence, one of the determinants of investment.
   2) When the recession is over there will probably be a similar number of workers working for small firms than there was before the recession because, as the article states, large firms have the advantage of offering higher wages. The extra workers the small firms gained during the recession will be more attracted to these larger firms. If the larger firm offers a higher pay, which is usually the case, then I would probably rather work in the larger company, as any rationale employee would, although it all depends on the situation and the atmosphere in both.

10. # Rocio Perezon 14 May 2009 at 12:53 am

    Shutting down factories would result in a drastic decrease of output as well as firing workers, whereas JUST laying off workers would also decrease their costs of production but continue the production of goods. Going back to microeconomics, in the short run (variable plant period) firms will change the variable resource which is labor, and in the long run (fixed plant period) firms can close down factories.
    In times of recession, people’s confidence in the economy decreases along with the investors who buy stocks in large firms. They therefore withdraw their investments leaving and could lead to bankruptcy.
    According to this article, during a recession, smaller firms hire more workers as the unemployment level is high and they are more likely to come across decent workers, so if they are coming out of a recession these firms will probably have a good amount of workers. However, in periods of healthy economic activity it is in people’s interests to work for large companies who offer lower wages due to economies of scale.

11. # Younes Huberon 14 May 2009 at 2:11 am

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    Laying off workers is a company’s initial reaction to a decrease in demand. This is so because that is the only reaction a company can have in the short run since it is the quickest way to reduce costs and decrease output. In the long run however, they may need to shut down factories.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    Since a publicly owned company is owned through shares it is owned by multiple people and hence suffers under the pressure of each one. Also, if the investors see that the company is doing badly, many of them may decide to sell their shares. This could prove to be a precarious situation for the company because if everybody wants to sell their shares at once they will eventually be worth less.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    I think that more people will be working for smaller firms because the people will be desperate for any decent job, and because small firms are more numerous and easier to find, they will higher more workers than large fimrs. I however, would rather work for a large firm, because in the future they will be able to pay better than the small firms and hence, since I will already be employed I will not have to fight for that job.

12. # jabbobbon 14 May 2009 at 2:38 am

    1. Ceteris paribus, if demand for a company’s good decreases, production (supply) has to be lowered in order to lower production costs. Since land and capital are more of a long-term investment than labor, factories lay-off workers. If demand was to increase again, it is easier to hire workers than building or re-opening factories.
    2. A publicly traded company will always try to satisfy its shareholders and attract more. In a recession, people are less likely to invest in a big company because the danger of losing asset-value is much greater than in a stable economy.
    3. According to the article smaller companies hire workers during and after the recession, because the bigger firms fired skilled workers that are of use for the smaller companies. I don’t know enough about this topic to say if I would work at a big or a small company. But if skilled workers from big companies get jobs at smaller firms I would probably work at a big company, become a quality worker and not have to worry too much about the next recession.

13. # Nicholas Burnhamon 14 May 2009 at 3:32 am

    What a great example of how workers can simply leave large firm should their wages drop. Their fallback plan would evidently be to get jobs from these smaller companies, because they aren’t hit as hard by the recession. I’d like to note that there could be a cycle forming here: recession is periodic, first of all. When the recession hits, larger companies will suffer a deal more; lose workers, lose support from the stock market etc. The large companies that cant handle the pressure will collapse, the ones that can will shrink. Smaller companies seem bigger, and with better labour options they are more likely to grow. So Big companies shrink and small companies have the potential to grow. In some cases I’m sure there is almost a full reversal of roles. It’s also interesting to note that because the bigger firms react faster to the recession, the small firms profit for all the new available labour, usually before the recession really takes its toll on the small companies.

    Shutting down factories is essentially the same as cutting jobs, isnt it?

    And once the recession ends, you would obviously jump aboard with the big companies, because they are going to be more likely to sustain quick, large growth.

14. # Finlay Smallon 14 May 2009 at 4:09 am

    The reason why Companies lay off workers before they start to close down factories, like many people said is due to the Fixed Plant period, in which Labor is the the only cost that is variable, and land and capital is fixed. In the long run firms will be able to shut down factories if need be.
    I think that the pressure that the Public Traded companies face compared to that of small firms is extremely large. Public Traded companies are owned by many investors and all of them are expecting large returns. They chose to invest in company X because they expected Company X to have greater returns then Company Y, and Public companies need to respect the investors by increasing profit etc. In a recession the pressure is far greater on the large firms because they are not only expected to survive and make profits but increase year by year. While small firms during the recession have only one goal and that is in fact survive.
    At first it will seems that more people will work the Small firms due to availability of firms and workers, but as the world recovers and companies like GM and Ford open up again to take back the thousands of workers laid off then the big companies will again have more over the small firm.

15. # Helene Gleitzon 14 May 2009 at 4:42 am

    Because there is a decrease in demand, firms will produce less of a product. They will reduce supply in order to minimize their costs, and one of their main costs is labor. It is a “quick” way to decrease costs which is why it is called the short run. They would not shut down factories because it is a huge step from laying off a certain amount of workers and it is more of a long term solution to a falling demand for the product.
    Publicly traded companies want to satisfy their shareholders and have a certain responsibility to make the right choices for their shareholders. They have faith in the company which puts pressure on the firms and they have to make sure they make as much profit as possible. A small company on the other hand, does not have investors and does not have the same pressure put on by the shareholders.
    I think that small companies will be able to hire more workers right after the end of a recession because workers are desperate to find jobs and would rather be making a little money than none at all. They will therefore accept lower wages, which are often provided by small companies. As recovery progresses, and the economy returns to full employment, bigger companies will be able to offer higher wages and will be able to employ the majority of workers.

16. # Dominic McNameeon 14 May 2009 at 5:03 am

    Large firms will lay off workers before shutting down plants as labour is a short term variable resource whereas plants are not. Also, if the firm shuts down a plant without laying off workers they will have a large number of employees with nowhere to work.
    Publicly traded companies have to do what will please the shareholders. This might not necessarily be what is best for the company in the long term.
    Immediately after the rescission is over/recovering more people will be working for small companies, but in the long term I think it will return to what it was before.

17. # Alex Hanon 14 May 2009 at 6:15 am

    1) At the momment the recession starts, firms cannot shut down factories and close lands because it takes time. However something they can do immediately is firing workers.
    2) Large firms are owned by many share holders, so it is in the firms best interest to keep all these share holders satisfied so that they do not harm their reputation. Facing bankruptcy would result in depts and legal issues with all the share holders.
    3)In a healthy economy, large firms will be most attractive…. However during a recession, smaller firms are better off.
    This might be a farfetched guess but it might be that during the recession, the smaller companies grow and the larger companies shrink. After the recession, the smaller companies would become larger companies that attract workers.

18. # Bastion 14 May 2009 at 8:35 pm

    Firms need to cut the supply to lower production costs, because there is a decrease in Demand. During the fixed plant period, companies can only alter their variable resources, like labor. From this we can conclude that companies fire workers when there is a decrease in demand. The reason laying off workers is the most effective action to take when faced with falling aggregate demand, is because when the recession is finally over, it is easy to lure the unemployed people to your firms with low wages.

19. # Benji Rosenon 14 May 2009 at 11:07 pm

    1.Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    the workers
    2.What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    3.When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

20. # Benji Rosenon 14 May 2009 at 11:13 pm

    AAAH it always does that to me, I press enter to make a new paragraph,and it posts it. ok: no more paragraphs… Workers are being layed off by big companies in times of recession since they are a quick way of cutting costs, they would keep them if they could lower the wages, but since legislation and contracts prevent them from doing so they must fire the workers. They do this, over shutting down factories, since this way they can attempt to keep the supply as high as possible, with less workers working harder, whilst not loosing the investment in capital they have made by buying the factories. The Big publicly traded companies have the pressures from their investors to deal with in times of recession. Their profits go to investors, so if the investors do not receive any money, since there are no profits, then they put preassure on the company. They could even start selling their stocks, lowering the value of them. When the reccession is over, more people will work for small companies, yet they will soon be headhunted by the larger coorperatoins and we will see a distribution of labor much like it was before the recession. The small companies will also compete hard against each other and the big firms and go bankrupt easily, leaving much of their labor force available for the larger companies to aquire.

21. # Amit Zaidenbergon 15 May 2009 at 5:53 am

    Big companies lay off workers when the demand for their products fall because they will supply less and workers is a variable that can be changed within the fixed-plant period, thus quickly correcting their overstocking issues.
    Publicly traded companies face investors and keeping the appearance of a healthy company as well as approval of a board. Small, privately owned companies have much quicker reaction times and are able to make important decisions quicker as a result.
    When the recession is finally over i think a large influx of small companies will be the result and many more people will be in small companies. These comapnies will proabably end up merging or being bought and turning into a large corporation but that will have to be years after the recession is over. I would rather work for a small company because it is easier to pprove how essential you are and there are larger chances of being noticed in a small company.

22. # Simon Strongon 16 May 2009 at 4:23 pm

    1. A company will lay off it’s workers in the short term because we would be in that, the short term (or fixed plant period) where only the labour resources, workers, are variable and can be adjusted to minimise costs.

    2.A publicly traded company has to answer to it’s shareholders, and so there is an increased pressure put on the firm, but also in times of a recession many people fear losing all their money so they sell their shares which leaves the publicly traded company with a deficit of capital for investing. A privately owned company does not face this problem, as generally the only way they’ll lose all capital is if the owner decides to close the business.

    3. At the end of the recession I think we will see a lot of small businesses hiring people from the major firms, but in times of economic growth I think it is better to work for a larger firm as there are more opportunities for promotion and higher wages.

23. # John Lyons-Harrisonon 04 Nov 2009 at 9:41 pm

    Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    1. It’s easier and quicker to lay off workers before selling off factories. Laying off workers is cost-efficient and usually the first step for firms in trouble. If there is less demand for the product, then less workers are needed to produce the amount of the product demanded, however small. Selling factories is a last resort because more of the product can’t be produced without factories.

    2. A publicly traded company that sells stock is under pressure to satisfy their shareholders, which influence their decisions. Privately owned businesses can make their own decisions without regard for anyone else because no one else has a stake in the company.

    3. When the recession is over, people will want to work for larger companies because they percieve larger companies as having more job security, higher wages, and more opportunities for career advancement.

24. # John Lyons-Harrisonon 04 Nov 2009 at 9:45 pm

    Response to #2 Aleya Thakur-Weigoldon

    Also, big companies have to worry about satisfying their shareholders, and their policies and decisions are influences by people who own stock in the company. Privately owned businesses have no such problem.

25. # Alison.ecslb.f09on 05 Nov 2009 at 10:11 pm

    1.Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    The first thing that big companies do when they are faced with a falling demand for their products is to lay off some of their workers. They do this rather than shut down their factories because factories can often function passably with a reduced level of employees, and it is significantly easier to hire new employees than it is to reopen a closed factory.

    2.What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    A company that sells stocks to investors faces added pressures during a recession because it has the need to maintain a healthy appearance so that the price of its stocks doesn’t plummet. The only way to do this is to keep the shareholders happy, which might not be beneficial in the long run. On the other hand, a small, privately owned business does not sell stocks to investors, and thus it is able to look only at the beneficial options for the business, rather than the needs/wants of the shareholders.

    3.When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    During and immediately following the recession smaller companies will be able to higher highly skilled workers that larger companies laid off. However, once the recession is over the larger companies will be able to draw many of these workers back with a larger salery. Immediately following the recession, there would be more people working for small companies than before the recession.
    Personally, I would rather work for a small company than a large one, because it would be more intimate. I like to know the people for which I am working, and I would be better informed on important issues.

26. # Alison.ecslb.f09on 05 Nov 2009 at 10:24 pm

    Response to Helene Gleitz:

    Smaller companies will be able to increase thier workforce during the recovery period, due to the high level of unemployment. Later, as the economy recovers further, the larger companies will be able to offer higher wages and and will be able to “employ the majority of workers”. However, the question must be asked – is it possible for smaller companies to benefit in the long run from a recession due to their increased level of employment? It can be argued that workers may be more happy working with small firms, and less trusting of larger firms, and thus small business will benefit. On the other hand, it can be said that once the recession is on the mend, larger firms will be able to draw the workers back with higher wages than the small businesses offer.

27. # jiyoon.ecslb.f09on 05 Nov 2009 at 10:26 pm

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    - I think it was probably the corporations of the lay off workers instead of failing down the whole factories, the reason why is that the workers are not a long term investment like factories. People who work there can make more efficient work, get more profit and higher the workers for not re opening the factory. Re opening the factory will be very complicated and difficult because it’s a lot of work. As we have learnt that when the demand of a product falls then companies reduce their supply of the product, because less is bought. Obviously, when less output is produced, less workers are needed for all the factory work.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    - Usually the small companies are not as engaged in public trade in contrast; they concentrate on their personal benefits while bigger companies have many other parties involved in their business. According to the article, a publicly traded company is owned by many investors who ideally anticipate high returns from the stocks they buy. In a recession, they fright that the value of their stocks decline and because of this in some causes pull out their investment from the company. What is more, the publicity traded company will face a public dispute with unions if they want to lay off workers.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    - It is not a quiet easy decision to prefer for which companies we want to work for whether it’s smaller and bigger. This however, based on the article, the economy will pull through because small firms will start engage people again due to their higher supply of skilled workers, this will lessen unemployment and larger firms that will start hiring more people as well. On the other hand, in my opinion, more people will start working for larger companies because they can benefit more, which means, in larger companies, although they have more work, they can get higher payment and can the company can be run well for long time. However, if I were had to work in a small company because I had no money or ability to be employed in a big company, then I will still work in a small company until I am employed to a larger company.

28. # Leyre.ecslb.f09on 05 Nov 2009 at 10:31 pm

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    When the demand is falling in a big company, the first thing that happens is that the company starts to lose money. So, since it is losing so much money, instead of just shutting down the company which would make the chances of recovery zero, the company fires a small amount of workers, so they balance the amount of money being lost because of the falling demand, by not having to pay for the work of so many employees.
    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    That a publicly traded company might risk that the investors deny any stock, and so the economy does not depend on that publicly traded company, but on the companies it ‘publicly’ works with. On the other hand, a privately owned business does face the problems in a recession, but it is not affected by other companies.
    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    I think that when the recession is over, people will start to work for smaller companies, although as the article says big companies will have an advantage on the economy, as they can provide better salaries. However people will prefer to work with smaller companies as these will have a higher guarantee of stabilizing the jobs. I would also decide to work in a smaller company after the recession.

29. # jiyoon.ecslb.f09on 06 Nov 2009 at 1:59 am

    To Leyre

    Leyre, I read your answers to the questions. It was nice to read, thank you. Now, I think I need to make some few points that you missed to write. For question 3, I think you need to state why not most of people wouldn’t work in big companies. That would make more sense of you explaining the reason. Also, when you said according to….. it is important to put quotation if you are quoting someone’s writing. However, I’ve seen new good answers probably at some points I was wrong as well. Good work!

    JiYoon

30. # Raphael.echl.f09on 06 Nov 2009 at 6:45 pm

    1. Big companies are more likely to lay off workers first instead of factories because if the demand decrease less will be needed to produce but not nothing so the factory is still needed to produce a little. And after a recession it is easier to find workers again instead of a factory.

    2. In PLCs there are shareholders who want to get profit, so there is a lot of pressure from them. in privately owned businesses the owner can make decision like he wants. there are always a lot of shareholders and all of them want something slightly different so it is harder to satisfy them.

    3. I think that just after the recession a small firm is more likely to have more workers than before as big companies lay them off. But over a period of time it will loose workers because big companies can offer more than small firms, so they will go to big firms.

31. # Raphael.echl.f09on 06 Nov 2009 at 6:51 pm

    to John Lyons-Harrison

    I agree for the two first questions, but for the third one don’t you think that in the short term small companies will have more than before.

32. # Celine.ecslb.f09on 06 Nov 2009 at 9:41 pm

    1) Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    There can be many reasons that the first thing big companies do is to lay off workers. Firstly, with the falling demand for their products, there is less revenue coming in and it isn’t as profitable for them to have the same amount of works than it was before, when the demand was higher. A point that the article, “Why Are Large Companies Losing More Jobs Than Small Ones?” (Time), mentioned about why this could be like this is because large companies have more pressure from all of their shareholders, to keep profits attractive, and to do this, a decrease in workers is the fast way of doing so. It can also be that the large companies suffer more than the smaller companies because of their area of work, which might be affected more greatly than others.
    The big courses don’t just shut off their factories because that would be stopping production completely, and thus there wouldn’t be any revenue coming in at all. The factories still need to be producing to meet the demand, as small as it might be.

    2) What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    A publicly traded company has the pressure of keeping their investors happy, and thus still involved in their company. Many big companies rely greatly on the support from their shareholders, and if these people extract from their positions, the company will loose funding, credibility, and support from many people that help them be as successful as they are. Small, privately owned businesses, because of their size, don’t usually have these share holders, since they’re not public organizations, and thus have less pressure to upkeep their positions.

    When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    Because of this big scare, I think many people will transfer to smaller business where they feel that they’re jobs are more secure. The opportunity cost would be the possibility of lower wages than if they were working for larger companies, however, they are trading this factor in for a potentially longer lasting job. I think because of the circumstances I would have better chances with working for a smaller company, however, hopefully by the time the recession is over, the larger companies will continue working the way they did before, so it won’t be too risky working for them.

33. # Celine.ecslb.f09on 06 Nov 2009 at 9:50 pm

    Response to Alison.ecslb.f09:

    Alison,

    A point that you mentioned in the answer to your third question that I thought was interesting is that the larger companies will be able to attract more people will higher wages. I’m not saying that this is right or wrong, I’m just thinking about the potential circumstances after the recession. I think that in a way, the larger companies will be able to pay more because they have higher funds, but I think that many big companies will be skeptical in regards to the amount of money they spend on salaries (and bonuses! an attractive factor for many), because this overspending is a part of the reason that caused the current crisis and they probably will be very cautious in dealing with this is the future since they don’t want their companies to return to bankruptcy the way that they did before…
    So, I think that this will be an interesting turnout after the recession!

34. # kerstin.ecslb.f09on 09 Nov 2009 at 3:23 am

    Why is lying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    I think companies have a simple reason for lying off workers, first thing when a big company is facing a recession. The demand is decreasing, as people are usually trying to save their money in a recession. The big companies therefore gain less revenue, therefore profit decreases too. When demand is low, less workers are needed “anyways” to produce less output and firing workers is the easiest way for a firm to reduce costs. Also, it might be harder for a smaller firm to fire workers, because the smaller the firm, the more likely it is that they are already working at their minimum workforce, because the revenue simply doesn’t allow anymore workers. The likelihood is greater in bigger companies. Big companies don’t simply close a factory, because some demand is still present, although it is not as much as it used to be. The firm would shut off part of their revenue completely, thus decreasing profits even further.

    What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    A publicly traded company faces problems with shareholders. Generally, shareholders put money into the company by buying shares; they invest. If the company makes profit, they sell their shares again (which have gained in value), which means the shareholders have made money through the company making profit. In a recession, a companies shares are of low value, because less people invest in the companies, thinking that the company might make a loss, (or that their shares might become worth even less than currently). Therefore a publicly traded company has lots of pressure from the shareholders, because if the company is not performing well, nobody will invest in it, whereas the privately owned business does not face this problem, since people cannot invest in them.

    When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    I think that it will regulate itself, but that overall a little bit more people might be working in smaller companies. As read in the article, smaller firms might even hire more people during a recession. I would prefer working in a small company, firstly because it is more personal, but also because the job would probably be more secure than in a big company.

35. # kerstin.ecslb.f09on 09 Nov 2009 at 3:36 am

    To Leyre:

    I agree with your third point that people will probably want to work in smaller companies, seeing as their working place is more secure, even though salaries are smaller.

    However, you mentioned in your second point that a privately owned company faces the same problems as a publicly traded company. I don’t agree with that. The PTC depends on people that buy their shares, so that money can be invested in their company. The shareholders own the company, and if nobody wants to own part of the company no investment is taking place. The PTCs depends on shareholders AND customers. However, in a POC, nobody is buying stock, so the company is not dependant on shareholders, only on customers. I think that this might suggest that overall POCs might lose less money in a recession that PTCs??

36. # diana.ecsl1.f09on 09 Nov 2009 at 7:44 am

    1. Large companies can afford to lay off workers. Shutting down the factory would mean having no profit whatsoever. At least with layoffs companies can maintain profit even if it means sacrificing a fraction of the work force. Wages also happen to be inflexible; if wages were to be decreased, workers would rather be laid off than receive lower pay.

    2. Publicly traded companies worry about being severely affected by recessions due to manufacturing purposes. Additionally, there is a great pressure to maintain profits because of share holders. Inflexible wages are a critical issue as well because this means there will be difficulty in maintaining the work force.

    3. At the conclusion of this recession, I think the public would be more inclined to work for smaller companies than larger ones, myself included. Though wages may have to be reduced during economic strain, better that than being laid off and having no income altogether. Small, privately owned businesses care more about the well-being of their workers than maintaining profit. Furthermore, they are able to hire the people that big businesses get rid of because wage inflexibility does not serve as an issue. Lastly, small companies do not have to worry about share holders. I would definitely feel much more secure as an employee of a smaller business

37. # diana.ecsl1.f09on 09 Nov 2009 at 7:46 am

    To Celine:

    I totally agree with your third answer. I find it interesting that you mention opportunity cost; that never crossed my mind. That’s a great way to look at it.

38. # diana.ecsl1.f09on 09 Nov 2009 at 7:49 am

    To Alison:

    You made a few good points regarding question 3. It really is all a matter of time. Like you said, initially people will shy away from working for larger corporations because of fear. But they will eventually be drawn back by larger salaries. I agree that working with a smaller company is more of an intimate experience. The environment is vastly different from the impersonal one at a very large firm.

39. # victor.ecsla.f09on 09 Nov 2009 at 7:20 pm

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    It is easier to lay off some workers and try to sell products even though it will be in a smaller scale. Instead, if they shut down the factory, there is not a way to get out of the ”recession” or keep producing.

    2. What pressures does a publicly traded company(one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    Publicly traded companies have pressure because they need to satisfy shareholders. Privately owned business can take decisions regardless for
    anyone else.

    3.When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    After the global recession small companies will have fewer workers than before the recession. This is because the small companies cannot offer the work security that a large company can offer. I would rather work in a large privately owned company because the work security is higher.

40. # victor.ecsla.f09on 09 Nov 2009 at 7:23 pm

    To Raphael.echl.f09:

    I disagree with you on the last answer. You said that there will be more workers in a small company. I think that in a recession the smaller companies are the first companies to shut down due to the decrease of demand, on the other hand, large companies are more likely to get through the recession without shutting dowm.

41. # Katharine.ecsla.f09on 10 Nov 2009 at 1:13 am

    Laying off workers is the first thing big companies do when faced with falling demand for their products because it is easier and still allows them to produce the product and hopefully earn a profit. If companies shut down factories, there would be no source of income at all for the company, however if they lay off workers at the factory, the company can still produce.

    A publicly traded company faces the problems of investors selling off their shares of stocks in the company because the recession could cause them to lose the money in their investments. A small, privately owned business does not face these problems because they do not have to worry about whether or not their investors will back out and sell their shares. A publicly traded company faces the pressure of having to do what is in the best interests for their shareholders and they must do the best to maximize their profits and the value of their stocks.

    When a recession is over, more people are likely to be working for small companies. I would personally rather work for a small firm, because layoffs are less likely and companies don’t have to act to benefit their shareholders the entire time. Small firms are also more likely to be able to hire or keep employees.

42. # Katharine.ecsla.f09on 10 Nov 2009 at 1:14 am

    Response to John Lyons-Harrison
    It is much easier for big companies to lay off their workers before shutting down factories as you said. It is much more cost-efficient and still allows the company to earn money and produce the product. Shutting down, as you said, is the last resort because nothing is produced. I disagree with your statement that people will want to work for larger companies when recessions are over. The likelihood of being laid off or fired is higher with larger companies, yet with small companies, they are more likely to have the ability to hire and pay better wages during the recovery period after a recession.

43. # Jack.ecslb.f09on 10 Nov 2009 at 2:10 am

    Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    Laying off workers is the first thing that companies consider when there is falling demand for their product as it potentially can accomplish two goals:
    • The first goal is to reduce costs, this is the most obvious concern and the most obvious and simple solution is to reduce wage costs by reducing staff numbers. This enables the company to function for longer on a smaller income.
    • The second goal is to ultimately increase demand on the product once again, enabling an increase in price. A potential strategy to do this is to reduce production. The result of which being an increase in the proportional demand to the supply therefore enabling a rise in price.
    What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    A publically traded company relies on the money of investors to grow and prosper. During times of recession the willingness and ability to invest can be drastically reduced as we are seeing in today’s global markets. This is also coupled with the change in emphasis being selling rather than buying (in terms of stocks) therefore the drastic fall in price of the stocks would have its resulting effect on the value of the company and therefore its borrowing ability. These unfortunate would not be felt by a privately owned firm.
    When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    I do think that more people will be working for small firms than there was before the recession, however I do think that this will be merely temporary, as in the long term I believe every industry will eventually fall to a global monopoly. I’m basing this theory on the idea that collectivized, massive companies have the potential to run more efficiently and produce at lower costs than a network of small business. Therefore in theory a network of small businesses will always loose out to large companies. This trend is seen best in the food retail market. The reason that I believe more people will be working in small firms after the recession is the fact that large companies that were previously thought to be “Too big to fail” have been devastated and there could be a fearful atmosphere surrounding them.
    I would personally like to work in a small firm rather than a large one as I would be attracted to the ability to grow and expand the business exponentially which would not necessarily be possible at a large firm.

44. # Jack.ecslb.f09on 10 Nov 2009 at 2:15 am

    To: victor.ecsla.f09

    I disagree with your final answer, as you said the publicly traded company has to satisfy their investors, often with massive jobs cuts in times of recession. So can it therefore be said that large publicly traded companies can offer higher job security than private firms?

45. # michael.ecsla.f09on 10 Nov 2009 at 8:16 am

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    This is a less drastic reduction in production (and thus in profit) and is much easier and more feasible to do.
    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    A publicly traded company has to report to their shareholders and explain why profits are down, but small companies are only accountable to themselves.
    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    More people will be working for small businesses, as jobs will be easier to get there in harsh times. I would rather work for a large firm, as there are more promotion opportunities and higher salaries.

46. # michael.ecsla.f09on 10 Nov 2009 at 8:17 am

    To jack.ecsla.f09:
    No, publicly traded firms have less job security as people must be fired to reduce costs and satisfy the shareholders.

47. # theresa.ecslb.f09on 10 Nov 2009 at 11:19 am

    Laying off workers is the first thing big companies do when faced with falling demand because it provides a way for the firm to downsize without drastic effects. If instead they closed down factories or plants then when the economy gets better and the demand increases, it takes a lot less time, effort, and money to hire employees rather then buying back a factory and starting it up again
    In times of a recession, large publicly traded companies face pressures created by their investors which smaller private companies do not. A large company who is founded on investments from other people is continually under pressure from those investors who want as much profit as possible, because naturally they want to be making as much money as possible. This pressure incited by investors is not prevalent in smaller, privately owned companies.
    When the global recession is finally over, I think smaller companies will slightly be less employed. Because no large firms are hiring in the recession, if someone wants a job the only place to go is smaller companies. When this changes and large companies are hiring, they probably will have higher wages then smaller companies so some people will leave the smaller for the larger but I think most of the people who will start to work for the larger companies are those who are unemployed now, because of this I think that smaller companies will still have about the same amount of people working, but maybe slight less, accounting for those who are ambitious.
    It depends on whether I would want to work for a smaller company. If I wanted to make this company be my career I would want to work at a larger company because there probably is more room for promotion, however, if I just wanted a job then I might prefer a smaller company because in times of recession I would most likely have more job security.

48. # theresa.ecslb.f09on 10 Nov 2009 at 11:25 am

    To victor.ecsla.f09
    While larger companies might have the upper-hand surviving a recession, when a larger company downsizes during the recession, they layoff large amounts of people while a smaller companies downsizing might be one person or so, larger companies layoff exponentially more people so I don’t know if your job security would be higher at a large company. Even if large companies don’t layoff as frequently, they layoff more, which more than compensates for the times when they don’t layoff.

49. # derek.ecslb.f09on 10 Nov 2009 at 2:06 pm

    When the demand of products fall, the derived demand of workers will also fall and this would either decrease the wages of workers or decrease the amount of workers employed or both. This will then decrease the motivation of workers and workers will ‘lay off’. However, the company will not shut down factories because the cost of re-setting the factory will be high when the recession period is over and big companies have the financial resources to keep the factory during recession. However, by keeping factories the company receives pressure from share holders as there are additional costs to run the company and the share price is likely to drop. This makes the liability and credit of the company likely to decrease and makes the company harder to fund from banks or other firms and makes the company in a more difficult situation. This creates an endless spiral of bad sales, lower wages, lower output, lower share price, lower liability and worse sales. This is the reason of many people working in big companies changing jobs to small companies after recession periods as they realized that the big companies have too much burden on them.

    To Leyre:
    Your answers are great and I absolutely agree with your response, especially in question 3. Workers do not just look at their wages, but many things else, such as fringe benefits, having a closer relationship with his/her teammates and a lower chance of being fired.

50. # courtnei.ecslb.f09on 11 Nov 2009 at 11:59 am

    Laying off workers is the first thing big companies do when faced with falling demand for their products because it is the fastest, easiest and least permanent way to cut costs. When demand declines, the necessary workforce declines and workers in big companies become expendable. It’s very easy to fire people, and equally important, it’s very easy to hire people back. Consider what would happen if demand rose again quickly after a major decrease. If the company had shut down some of its factories, it would be unable to profit from this rise in demand. If it had previously simply laid off workers, the company could hire new people and would be back in business much faster.

    The direction of a publicly traded company is influenced by many shareholders, while the direction of a small, privately-owned business is controlled by one individual or a single group of individuals working toward similar ends. Unlike publicly traded companies, no one invests in private companies, so they receive no external pressure. Publicly traded companies rely on shareholders for investments so the company can continue to expand. In times of recession, these companies are hit hard when the values of these shares go down or when shareholders buy out in fear of losing money in the company. Furthermore, because they involve many shareholders, the company is pulled in many directions and must satisfy the demands of these shareholders or else they will lose investments.

    Toward the end and immediately after the recession, I think more people will be working for smaller companies than before for the reasons outlined in the article. In times of economic hardship, small companies are less likely to lay off workers because their workforce is smaller by nature. Also, they are then able to scoop up talented ex-workers of large companies who have been laid off. However, as the economy begins to pick up, I think things will even out and eventually bounce back to the way they were before. Eventually, large companies will attract more talented workers with higher wages. I personally would prefer to work for a smaller company because I would rather a closer, more intimate working environment.

51. # courtnei.ecslb.f09on 11 Nov 2009 at 12:08 pm

    To michael.ecsla.f09:

    I agree that publicly traded companies cannot offer greater job security in times of recession. Being publicly traded, they must bend to the will of their shareholders to appeal to investors and are much more likely to lay off workers when demand falls. After all, a larger component of a big company’s workforce is devoted to making huge profits than in a small company, in which most of the workforce is devoted to keeping the company afloat financially. Workers are much more expendable to a large company than to a small company and therefore way more likely to be let go at a faster rate when demand goes down.

52. # kaitlin.ecslb.f09on 11 Nov 2009 at 12:32 pm

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    -When companies have to cut the budget, they lay off workers instead of shutting down factories because in most cases, factories can be operated with less people. The factories are what actually make the good, so therefore the company is still able to produce the same quantity as before, yet they don’t have to spend as much on making it.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    -Publicly traded companies rely greatly on their investors for the funding of their company, and when a recession hits and the investors withdraw from that company, the company then loses its funding which leads to bankruptcy of the company. However, most small or privately owned businesses do not rely on investors for funding so they do not have to deal with the sudden loss of funding.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    - When the recession ends, I believe that more people will be working for smaller companies, so that they have more assurance in the security of their job. I would prefer to be apart of a small firm as well because, then I am more so guaranteed my job, and I have a better chance for a higher income.

53. # Bryan Robinsonon 17 Nov 2009 at 6:57 am

    Bryan Robinson
    The reason for big companies laying off workers instead of shutting down factories is that they want to be ready in the case of a drastic improvement in demand for their product. Also laying off workers is a quicker way to cut costs plus the company already owns the building in which the factory is located.

    A publicly traded company suffers from the loss of investors in a recession that a small business would not. The traded company may lose shareholders because of financial issues or the shareholders may have doubt that the company will return to its once great investment and the shareholder would sell their stock. This is not a problem for small private companies because with a single investor he has invested so much money to start they don’t want to waste it.

    When the recession is over I believe that there will be more people working for the small companies to start, if the self-correction theory holds true however many will then start to leave small business because of the temptation of high wages.

54. # Bryan Robinsonon 17 Nov 2009 at 7:05 am

    Re: Christian Evertz
    I agree with you 3rd comment because at the start of the economic upturn the small businesses will have many workers that have been hired during the recession but once the economy is good again and large companies have regained their financial security they will have the ability to raise wages and hire more workers.

55. # Laith Charleson 17 Nov 2009 at 9:13 am

    The third comment you made is very interesting, and something I hadn’t considered myself. These higher level employees being let go will settle for the lower wages that some of these smaller companies are offering because bottom line they need some kind of income irrelevant of how low it can be in comparison to their old salary, they cannot pick and choose in times of need. Another thing that springs into my mind is that in smaller companies employer to employee relations develop, thus, their is a more emotional tie between the two making letting somebody go a last resort. In many respect the smaller companies for the most part are more considerate to the welfare of their employees.

56. # Olajumoke.ecslb.f09on 18 Nov 2009 at 12:16 pm

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    I believe that governments lay off workers due to the fact that because they are less willing to take a wage cut, getting rid of workers serves as an incentive for workers not to complain. Plus, shutting down factories are much more drastic measures when laying off a few workers will keep productivity higher than shutting down the factory and will create better incentive for workers.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    One of the problems that a publicly traded company faces is that it needs to find a way to produce the same amount consistently or else investors will remove their money and put it somewhere else. Small, privately owned businesses do not have to worry about keeping a consistent sale number as most demand will rise and fall depending on the time of year etc.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    Most people would probably work in a large firm as the huge spike in money will re-attract those who had been unemployed or working for small companies. I would rather work for a small company because there is a greater job security.

57. # Olajumoke.ecslb.f09on 18 Nov 2009 at 12:24 pm

    response to kaitlin.ecslb.f09

    Kaitlin, i agree with a lot of the points you raised but in the case of your second answer, wouldn’t there actually be more investors because the prices would be lower? I think the real problem is that it would be more competitive because investors are in a more powerful position in relation to decisions.

58. # ben.ecsla.f09on 19 Nov 2009 at 12:58 am

    Laying off workers is a the first step for lager companies to take because it makes the slowdown process gradual, as opposed to a big jump that might be seen if an entire factory was shut down. Companies can find ways to run factories will fewer employees, while at the same time decreasing production costs due to wages. If a company were to shut down an entire factory, their production costs would decrease, but so would their production rate. Also, if the economy were to quickly take an upturn, it would be easy for the company to re-hire employees, so the solution is a less permanent one than shutting down a factory.
    A smaller company in a recession can be more concerned for it personal survival in a recession. A small company does not have the pressures of a publically traded company such as investors to please. Companies that are publicly traded face more problems during recessions, because they are supposed to take all actions, on behalf of what is best for the shareholders, which puts pressure on companies to reduce as many cost as possible to satisfy the shareholders.
    The reasons that smaller companies are faster to hire back at the end of a recession are: the company can recover faster due to its small size, there are a great number of small companies, and the hiring of a single employee for a small company is a much bigger deal for a small company, so they will usually take an active role in pursuing the best workers. I would actually prefer to work for a larger company directly after a recession, because the publicly traded company’s stocks are usually predicted to rise, and the stock options and more opportunity for advancement along with a more stable a secure future make a larger company more attractive.

59. # ben.ecsla.f09on 19 Nov 2009 at 12:58 am

    To courtnei.ecslb.f09

    I think that your point concerning the ability of companies to hire people again after the economy takes an upward turn is a very important one. Companies want to make a profit in the short term, but also have to think in the long term as well.

60. # Victoria.echl.f09on 04 Mar 2010 at 7:01 pm

    1.Laying off workers is the first thing big companies do when faced with falling demand of their products because this way the company can reduce its losses in the short run and make the best out of the situation. The only people that will be needed are the ones that make things. Specialized people will not be of such an importance anymore. If they shut down the factory instead they will have only losses.
    2.Public traded company face pressure in times of recession that small, privately owned business doesn’t. This is because in Public traded company they have to satisfy the shareholders so that they gain profit from their shares. And they wouldn’t want to lose their shareholders as in recession people will not invest in big companies, as the risk that they lose everything is much greater than with a smaller company.
    3.I think that when global recession is finally over, people will want to work for smaller companies as it is more stable in the economy and the risk is lower to lose everything than in a big company if any thing happens. I would rather work for a small firm as it is more secured that I will keep my job and that the business will still be ok incase anything happens. An other reason is because after recession their will probably be a lot of changes happening in big firms and they will have to reorganize them selves while in small firms that haven’t been so affected it will be more normal to work their and the company will probably have a chance to build up a little more.

61. # Victoria.echl.f09on 04 Mar 2010 at 7:06 pm

    to Olajumoke

    I really like how you thought about the fact that laying off workers is “better” than for example cutting wages as if they would cut wages all the employees will not want to work that much anymore for less money and that might result into people protesting against this and it might make everything worse for the firm.

    Vica

62. # Masaya.echl.f09on 06 Mar 2010 at 9:02 pm

    Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    Laying off workers is the first thing large corporations do when faced with falling demands for their products because it is the most convenient and easiest way to reduce cost for production, instead of searching alternative methods for production – labor is a variable cost. They do not shut down factories because hardly any profit would be made without producing their goods and the firm must at least continue making profit to keep on operating.

    What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    The pressures that publicly traded companies face in times of recession is the pressure from the people who hold portions of the firm’s ownership – the share-holders. Because firms are given ‘prices’ in the stock market, through the investor’s trade, when the firm is failing during an economic recession, these shareholders will sell off the ownership, which consequently, devalues the firm’s price.

    When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    When the global recession is over, I think fewer people would be working for small companies because as the economy ‘self-corrects,’ people would be more attracted to large corporations that provide higher wage than smaller corporation. If it were myself, I would be working in a large corporations because it would look better in forms for applying

63. # Masaya.echl.f09on 06 Mar 2010 at 9:06 pm

    Victoria.echl.f09>>
    You’ve mentioned in question 3 that small companies have less risk of losing everything but I don’t understand why large corporations would losing everything. The large corporations would steal the jobs away from these smaller firms, after its recovery from the recession. Just think about it. Small shops in the neighborhood are losing their jobs because large-scale super-markets is being operated everywhere – no wonder why small firm have more risk of bankruptcy.

64. # Trevor.echl.f09on 07 Mar 2010 at 10:42 am

    These big companies lay off their workers because of the costs associated with it. These workers are more likely to earn better wages at large companies than at smaller companies. This costs the large firms money. So what they do is shed some of these workers to relieve themselves. It’s not as smart to shut down a factory because it is a piece of capital that can once again be a valuable asset when consumer demand comes back up. Workers can be fired and hired easily. Factories can’t be opened and closed with the same kind of ease.
    It faces the pressure of being able to convince its investors that things are peachy and going well. It has to have conferences of investors where it presents business forecasts and why everyone should keep their money in. With small businesses this can all be done among the staff and owners. There doesn’t need to be any high-flying graphs or analyses to restore confidence in the business.
    Yes, I think the Times article makes the point very clear that this will be the case when the recession is over. I would rather work for a larger firm. My main goal would be to work very hard to make it to a position where I would not be as expendable to the company. I would be able to survive the business cycles. And with a larger business, there would be more opportunity to rise up and eventually become very successful.

    Trevor Tezel

65. # Trevor.echl.f09on 07 Mar 2010 at 11:01 am

    Vica,

    So when you say “specialized” do you mean administrative? Because I see what you mean there. We sometimes see jobs that are occupied by people whose sole purpose is to “oversee” or “supervise.” I think in a recession some of these positions are expendable. But besides that, workers just are often paid too much to be kept on the roll. With factories, there are so many other long-term factors to consider. It is very difficult to reopen a factory during a recovery if it’s closed during a recession. It’s an amazing source of capital that should not be given up haphazardly.

    Trevor Tezel

66. # Meiling.echl.f09on 07 Mar 2010 at 9:48 pm

    1. The modern worker is probably the most expensive factor of production (referring to skilled and educated people in developed countries).

    The reason for this is simple: We are human, not lifeless objects. In business terms, this means we need healthcare, insurance, incentives like cars and housing/education subsidies, free lunches and so on. We are expensive to keep and we need to be treated nicely, so in most industries today we use up the most revenue per unit.

    A warehouse or a factory is an investment, so is machinery, but the flow of human capital through a company is exactly that, a flow – not permanent, and plenty more where we came from. In a recession, keeping the same amount of workers – the primary variable cost, is far more expensive than keeping a factory open – a fixed cost which will remain the same regardless of output. Thus the tendency to lay off workers in a recession.

    2. A publicly traded company must declare its finances to the public, in addition to being listed on the stock exchange. In times of recession if the company is facing difficulties this will have to be declared to the public, and poor results could result in the share value falling as people frantically sell. Also, fear of a recession could have people selling their shares anyway, regardless of whether or not the company has been badly affected by it. The value of the company depends more on the fear caused by the recession than by than potential or real facts. Small businesses are not listed on the stock exchange and do not have to declare their finances, so they do not have to share how well or badly they are doing, so as long as a good service is maintained, so is confidence in the company. Also people have no personal interest in how well the company is doing because they don’t own part of it.

    3. I think that many workers in massive corporations, like General Motors, view themselves as just-another-cog-in-the-wheel. There is no bond between employee and employer, and I think the massive lay-offs and reductions made by large companies as a result of the recession will reinforce this belief. In small businesses, employees are valued more and have a direct interest in the success or failure of the company as they know that this is a result of their own efforts.

    Consequently there could be a shift towards working in small businesses where employees will feel more secure. However, at the end of the day, it is the big companies than can afford high pay with large perks, so I think it largely depends on the values of the worker in question. Also they are the largest employers, and desperate people have little choice.

    For me, I would rather work in a small firm, knowing that in a recession I would probably still have a source of income, rather than live it large at a big company and then come to work one day and find that I have no job. Of course, what I value would depend on whether I had a family, a mortgage and so on.

67. # Meiling.echl.f09on 07 Mar 2010 at 9:55 pm

    Dear Trevor,
    At you comment about how you would prefer to work for a large company, I agree with you in that you would probably have better pay and more opportunity to move up in the corporate world. But in a large organization, there is a very large hierarchy, and during a recession, whole ranks of people can be wiped out, no matter how high up they are in the hierarchy. When there are many people working the same job as you, even if it is high ranking like a director or something similar, you can be laid off easily. I think a big problem here is that the management does not see people as people, but rather as units that can be removed when no longer necessary, whereas in a small company, the skills of each individual hold real value in the company. There is no solution to this problem, and I’m not suggesting it is better to work for a small business rather than a big one, of course, but just something to think about.

68. # sara.echl.f09on 08 Mar 2010 at 4:31 am

    1. Laying off workers is the first thing big companies do when faced with falling demand because if there are less workers, there are less costs because the company spends less money on paying their employees and can put more money into increasing the demand for their product either though advertising, lower prices, or new additions to the products. They don’t shut down factories because the process of shutting down a factory is a much more complicated process and keeping the factories open can be beneficial after the company has brought itself to an efficient level.

    2. Publicly listed companies are under more pressure because have to please shareholders who are less willing to continue to provide their capital if they see that a company is having problems maintaining its profitability. Privately owned and smaller companies do not have this problem because they do not have to satisfy shareholders.

    3. When the recession is over, smaller companies will be able to hire workers because there will be a lot of unemployed people desperate for work who will settle for lower wages. As the economy increases however, people will turn to bigger companies because they offer a more secure job with bigger wages.

69. # sara.echl.f09on 08 Mar 2010 at 4:38 am

    Meiling,
    I agree with what you said about workers using up the most revenue per unit, we need a lot of taking care of when we work for a company. That is why when companies get rid of workers, they get rid of a lot of the company costs.
    Sara

70. # Jacob.echl.f09on 08 Mar 2010 at 5:54 am

    When demand goes down, fewer consumers are going to spend with that company, which means the company is going to lose revenue. So in an effort to maximize profits, the company will have to cut costs. Laying off workers lowers costs without ruining the production. Shutting down factories can cut a lot of costs by shutting down factories, but it only hurts production further and the company suffers.
    These companies are pressured to only do things that help their investors because it keeps their stock prices high. Smaller firms do not need to worry about this because they probably just trying to get as much revenue as possible.
    It would really depend on how the global depression ends. For example, if a global leader issues a bill that promotes small business then more people will be working in small businesses. If Obama lowers the corporate tax and thousands of jobs are created and America’s economy becomes stable when they start exporting instead of importing, then the world’s economy will follow and most people will be working in factories. I personally would rather work in a large one simply because there is usually more job security depending on the industry. There is less individuality but as long as the paycheck comes in I’m happy.

71. # Jacob.echl.f09on 08 Mar 2010 at 6:01 am

    Sara,
    I think if the economy is out of a recession, it will because unemployment is down. So after the recession, unemployment will not be as much of a problem, so I agree with what you said about the shift in jobs. Smaller companies can offer short term jobs, but when on the rise, capitilism will do its thing and larger corporations will grow.

72. # Marrissa.echl.f09on 08 Mar 2010 at 11:45 pm

    Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    The reason that Big companies lay off workers is because if there are less workers, there is less money used to pay them. If a company needs more money, they take off extra workers so that they can have extra money that they used to pay that worker with and yet they still have the necessity of workers to keep the companies going. Small businesses are less likely to lay off workers in a recession and more likely to begin hiring them due to the large number of workers being laid off by big companies.

73. # Marrissa.echl.f09on 08 Mar 2010 at 11:51 pm

    Jacob I agree what you say about cutting off workers when recession seems to hit, I find that A smaller company that ends up hiring those laid off workers have 2 endings to the recession story; 1 they can end up getting more profit because more people can work, or they plummet to their death because too many workers just didn’t help the money issues, leading them to shut down. Ide rather work in a big industry too.. more money

74. # Dennis.echl.f09on 09 Mar 2010 at 12:50 am

    1. Companies would rather lay off workers than shut down the entire factory because there is a much lower cost to them to do so. Companies can easily fire workers when a recession is setting in and then re-hire more workers post-recession rather than dealing with shutting down and restarting the entire factory. Also, shutting down the factory would entail losing almost every worker anyway, so when restarting the factory, they will have to re-hire more workers.
    2. The pressure faced by publicly traded companies is enormous because the investors like to see results if they are to keep their financial support with that company, whereas private business owner only work to satisfy themselves and can make decisions on their own without a board of investors and similar complications.
    3. Post-recession, I think that a larger number of people will be working for large companies than small ones because the larger companies will be able to provide many more benefits and higher salaries to their employees. I would personally rather work for a small company because there are more personal interactions between people and you work for somebody that actually exists rather than some random man in China.

75. # Dennis.echl.f09on 09 Mar 2010 at 12:55 am

    Sara,

    I see how you think that workers will turn to smaller companies after a recession, but don’t you think that workers will be more interested in the higher wages large companies are willing to offer now that the recession is over and they are again hiring? I’m not sure if I’m correct in my assumptions, but I’m thinking that people will be drawn to the stability of a large company after a recession.

    -Dennis-

76. # Mattea.echl.f09on 09 Mar 2010 at 4:01 am

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    After laying off workers, a firm can still produce and make a profit. If they close factories, this is not possible. By getting rid of some workers, and giving remaining workers more hours, the company can save money without greatly reducing profits.
    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    They must continue to make profits, despite the recession. If they don’t, investors will not continue their investments, and the firm will suffer. A smaller, private business does not have this pressure.
    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?
    More people will probably work for smaller companies, because smaller companies hire more early in a recession while unemployment is high and the best potential workers are available. I would prefer to work for a larger company, because there are more benefits (such as health care) and higher pay.

77. # Mattea.echl.f09on 09 Mar 2010 at 4:07 am

    Dennis,
    You mentioned that more people would work for large companies because of more benefits and higher pay. Yet you also said that you yourself would prefer to work for a smaller company because of personal interactions. Are these personal interactions really worth a smaller paycheck and having to buy your own health care? While I can see the appeal behind personally knowing your boss, I think that the benefits from a larger company outweigh the potential benefits of a smaller company.

78. # chamonix.echl.f09on 09 Mar 2010 at 4:55 am

    1. Firms are more likely to lay of workers than to shut down factories because it is much cheaper to fire people than to close huge factories. In a time of economic downturn, it would be difficult to sell the factories. Also, in the case of economic recovery it is easier to replace workers than production sites.
    2. A publicly traded company will probably experience many people attempting to rid themselves of stocks in poor economic times. This would mean less money invested for the firms’ uses. Smaller businesses are generally not publicly traded and therefore are not subject to direct impact by the fluctuations of the stock market.
    3. I think that after the recession more people will be working for small businesses as they would have been hiring during the recession. I personally would rather work for a large firm as the work has more lasting, global impacts than in most small firms.

    Chamonix

79. # chamonix.echl.f09on 09 Mar 2010 at 5:01 am

    Meiling,
    You said that you would rather work for a small company because it will give you job security in a recession. Do you think that this is worth it even if that small business would probably not offer such strong health care benefits, promotion opportunities and high wages as a job at a larger firm? In your opinion, is it more secure to often have the means to look after yourself and your family well or to always have a job that will sometimes offer you the means to do so? I that sometimes it is hard to work for a very small business because its needs are constantly changing.
    Thanks for raising these great questions!
    Chamonix

80. # marcelo.echl.f09on 09 Mar 2010 at 7:18 am

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    Yeah, well, as everyone else has said, shutting down factories is not a very good option, since it will make the firm lose its whole business. By firing workers, however, it is reducing its production costs, and successfully managing some revenues, at least, which would not be possible if the whole factory was shut down. Furthermore, as Chamonix said, it is easier to replace workers than to re-open a whole factory. And anyways, when closing down a factory, the firm is still firing all of its workers.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    The problem with publicly traded companies is that they are ’sponsored’ by investors, who are usually not part of the company itself. Thus, if the investor sees he is losing his money, since the company entered the recession in a bad position and is crashing down, he will stop sponsoring it. Therefore, the publicly traded company has a great interest in not losing money during a recession, or it will sink even deeper. With a small business, this does not happen, since there are no external investors, so no outer pressure; the only pressure is from the members of the firm who do not want to lose profits.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    I think that, awkwardly, there were will be more people working for small companies. One would expect, as Dennis said, that people would be in the search for more money, and better and more benefits; however, as these workers had been originally layed off from large companies, I believe they will seek safety more than quality, since they will not want to go through all they went during the recession again. Me, I hope I never have to make such decision, but in case I do, I would choose the large firm, since, although the risk is high, the benefits in general are high as well, and sometimes you must take risks to achieve something. In a small company, I will hardly achieve anything. In a large one, if I work hard, I might get promoted someday…

81. # marcelo.echl.f09on 09 Mar 2010 at 7:27 am

    Dennis,

    You make indeed some good points, especially in question 2 where you make it so clear. And, yes, for question 3 I thought at first that people would prefer to join large companies because of the benefits. However, then I realised that these type of companies did not offer the ’stability’ you spoke about; as I said in my comment, it was those firms who fired them. Thus, I do not think people would want to risk themselves again, and will instead aim for a smaller, but more secure firm.

    In addition, you are right, sometimes it is good to know who you’re working for. I saw a movie once, where a guy was working for a firm, and without knowing it he was doing illegal moves. Anyways, what I mean is that large firms sometimes get involved in white-collar crimes, and everyone involved in the company can be found guilty, even if they did not know.

82. # Ralph.echl.f09on 14 Mar 2010 at 6:20 am

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?
    Laying off workers is a very cheap offer, and a recession is only temporary and it wold be a waste to sell of an asset which when the recession is over could be used to cope with the initial aggregate demand before the recession struck. This is only temporarily and the company will know when the economy starts to recover there will be plenty of workers out there to re-employ and get back to business.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?
    A publicly traded company needs to have a good image, and show that it is reliable and trustworthy. People invest to make a profit, and not to lose. A privately small owned business effects the owner and won’t affect the profit of other owners. At worst the recession might cause this small privately owned business to fail and there would be less competition for the publicly traded company.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    I think it depends on how affected the people were by the recession. You would have to put yourselves in their shoes to decide. As well how affected they were, also what type of market they were in..financial, manufacturing etc.

    Me preferably I would probably want to go back to a large company, as I agree with Dennis that there are more benefits and higher wages to be found at larger companies. However when a recession occurs its a great time to start a business, your business can grow immensely with all other business recovering from the recession. Great business opportunities can arise and the small business owner could sell of his business.

83. # daniel.echl.f09on 14 Mar 2010 at 3:53 pm

    1.Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    from the responses we can see the preveling view that workers are laid of because of the fact that they are a varible cost. this means that they are able to get rid of these workers alot quicker than selling a factory and during a economic ressecion we can see that this wouldnt be easy to sell as all business are in the same situation. Buildings are classifed as assets and can be put off against debt by reducing there assets they are reducing the size of the business and also captitial within the business is more plausible to get rid of workers. Keeping factories also means that they are able to re hire and have the factories readt for when the business starts to buy a larger work force.

    2.What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    There are many factors that the publicy traded companies neeed to worry about comapred to smaller businesses. The plcs need to consider the wants and needs of there stock holders they need to keep a good profitablity margin as to intice buyers and keep the stock holders. During these times we will see less people likely to invest we can see how the bankc have consderable reduced its investements and this is cause for concern for these types of business compared to the other businesses. We see that the smaller businesses dont have to satify theses needs as the onwer has control and the risk and so he is the only one effected and he can make changes also we see that normally small business look to breakeven where as larger firms look to increase profits.

    3.When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    This question is very dependent on the person and also what market that they are in and what the businesses offer. I think there maybe a small rise in the employment in the smaller business but as the article shows we can see that this will re adjust very quickly as people want to go back to bigger companies.
    personally i would rather work for the larger business as they will offer me more through there benifit regimes and also through the wages that they will offer to me. Larger firms are less risky than the smaller businesses and also there is more oppertunity for promotion and vertical movement in your job in the bigger firms.

84. # daniel.echl.f09on 14 Mar 2010 at 4:03 pm

    Hi marcelo

    great responses to the wuestion although i disagree with the answer you take in the final question that the bigger companies are more risky. i feel that the larger firms are much more safer to work for as they will never close down or go bankrupt as they are a much larger firm and so if you are laid off then you will be made redundent and will be paid for a period of time where as if a small business does the same you will recieve no money and there fore i think the larger firms are much safer to work for than the smaller firms and they are able to offer you alot more as worker than any of your smaller comapnies. none the less i agree with all of your answers

    Dan

85. # Catherine.echl.f09on 15 Mar 2010 at 7:35 am

    1.) When a big company faces falling demand for their products, the first decision is to lay off workers rather than to shut down the factory. This is because when a firm lays off workers but still has a functioning factory, it can still produce its product, and therefore make a profit in the future. When workers are laid off, the firm will have fewer expenses, and will therefore have the potential to make a profit even in times of hardship.
    2.) During a recession, investors often pull out their shares in a company. Also, prices of stocks fall during a recession, so a publicly traded company ends up being worth less – a lot less. Since a small, privately owned business does not have multiple, large-scale investors, it will not have to deal with massive financial losses in times of a recession. Of course, the losses will still occur, but not on such a large scale.
    3.) I think that when the recession is over, more people will be working for small companies – although this depends on the market that the statement refers to. Large companies often have to have large layoffs, whereas small companies are able to hire new people sooner in a recession.
    I would rather work for a small firm, simply because of the environment that tends to define small firms. They are more personal than large firms, and I feel like I would like that when working closely with people. While large firms may offer better benefits and wages, I would value the social setting of my workplace over potential pay.

86. # Catherine.echl.f09on 15 Mar 2010 at 7:40 am

    Hey Dennis,
    I like that in your response to the first question, you mention that it is easy for large companies to re-hire workers in the future. I think there will always be people to fill such positions, especially with the rising unemployment rates that occur during a recession. I also agree with the point – you make in response to the last question that you would rather work for a smaller company than for a large one. I completely agree here! I think small companies are much friendlier, and I think I would enjoy more of a laid back environment in my workplace.

    - Catherine

87. # elijah.echl.f09on 16 Mar 2010 at 12:30 am

    1. The reason large companies do not first shut down factories but instead fire workers is that in fact many of the large facilities they operate can be run by less workers than are present, with extras only there as a safety. This procedure eliminates inefficiency at the risk of danger. Additionally assuming a decrease in demand, having a worker sitting around a factory has maintenance costs, whereas an empty building not as much. Additionally workers are easy to re-hire as an economy rebounds, but the price of the building (which would have been traded at a loss) is not. In short economically speaking the building is better able to hold its long term value and has less need for maintenance.

    2. A publicly traded company faces pressures from its stock holders to continue to turn a profit. As these stock holders have invested in the company, they then expect results and through a board of directors can even succeed in firing critical CEOs and other executives. A privately owned business can just endure th recession or depression by learning to deal with reduced profit margins or perhaps even trading at a loss off a small bit. Due to the fact the owners have complete control there is no pressure for them to continue to turn the same levels of profit they did before an economic down turn or what no.

    3. When the global recession is over I would argue that more people will be working for small businesses as with the ending of the recession entrepreneurship will be at a high mark leading to the founding of many new business. This leads to small businesses being established and then hiring new and talented workers. The larger companies will still have to balance their books and make sure everything works out but he smaller ones can immediately see what is wrong and hire to correct it. I Personally would prefer to work in a small business seeing as it is a ore relaxed and personal atmosphere whereas a large business can sometimes be stifling with its corporate culture.

88. # elijah.echl.f09on 16 Mar 2010 at 12:34 am

    Catherine,

    I definitely agree with you with regard to the importance of a work culture and not just the sole benefits of wage or salary. Regarding the second question I never even thought of directly pulling stocks which farther contributes to the issue as well as places more pressure on the economy. It seems that the pressure of the stock-market can even cause companies to commit fraud and such. It’s Ironic that in an effort to ensure their own wealth, investors doom others.

89. # Issa.echl.f09on 17 Mar 2010 at 6:41 am

    1. Why is laying off workers the first thing big companies do when faced with falling demand for their products? Why don’t they shut down factories instead?

    Laying off workers is the first thing big companies do when faced with falling demand for their products because it is the easiest. Laying off workers doesn’t necessarily mean greatly decreasing output if he factory can be operated with less people. Also, laying off workers is a quick and immediate way to save money, whereas it would take longer to save money from shutting down a factory, since the costs are fixed.

    2. What pressures does a publicly traded company (one that sells stocks to investors) face in times of recession that a small, privately owned business does not?

    Publicly traded companies face the pressure to show profits and to save as much money as possible in times of recession, because they have shareholders who are all looking for their money. The shareholders care more about the worth of their stock then about the company in general, because the money aspect is all that they are involved in. This is different from a privately owned business as the owners are more interested in the ultimate survival of the firm and the overall well being of the firm instead of its dollar worth.

    3. When the global recession is finally over, do you think more people or fewer people will be working for small companies (less than 50 people) than before the recession? What would you rather work for, a small firm or a large one? Why?

    More people will be working for smaller companies, because there will be more small companies to work for and more small companies hiring than large companies. I’d rather work for a large firm, because although it might lay off more workers in hard economic times, it is generally more stable than a small firm

    -Issa

90. # Issa.echl.f09on 17 Mar 2010 at 6:49 am

    @ Elijah,

    I like how you explained why more people work in small companies after recession. The point you brought up about large companies needing to balance budgets etc. before hiring, while small companies can be more aggressive and respond faster is an interesting one. It highlights the inefficient bureaucracy that accompanies bigger countries. I reminds me of the diseconomies of scale that we discussed in microeconomics.

    -Issa

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