Comments on: Recession’s effects on small vs. large companies: some evidence in support of the Classical view of self-correction http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/ for students and teachers of Economics Wed, 23 May 2012 04:39:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Samantha Kim http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22537 Samantha Kim Mon, 19 Mar 2012 16:18:30 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22537 @William Overhauser Do you think that these incentives for publicly traded companies hinder or help the big businesses in the long run? Don't you think that this "period of loss" may just be because the small corporation is hitting a wall, but can afford to right it off as temporary because they do not have the incentive to fix the problem at that moment? @William Overhauser
Do you think that these incentives for publicly traded companies hinder or help the big businesses in the long run? Don't you think that this "period of loss" may just be because the small corporation is hitting a wall, but can afford to right it off as temporary because they do not have the incentive to fix the problem at that moment?

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Samantha Kim http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22536 Samantha Kim Mon, 19 Mar 2012 16:16:33 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22536 @Gunnhilder I agree with what you said about larger firms, but personally what would you do? Would you take the gamble and work for a larger firm even though there is a chance that you may be laid off during an economic recession or work for a smaller firm and suffer the consequences of not getting the glory or the high salaries? Will you think about a pension plan when you take a job? @Gunnhilder
I agree with what you said about larger firms, but personally what would you do? Would you take the gamble and work for a larger firm even though there is a chance that you may be laid off during an economic recession or work for a smaller firm and suffer the consequences of not getting the glory or the high salaries? Will you think about a pension plan when you take a job?

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Samantha http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22535 Samantha Mon, 19 Mar 2012 16:07:11 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22535 •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 big companies do when faced with falling demand for their products because they must still make enough money to satisfy their shareholders even though they must decrease production. By decreasing production they are hoping to sell of the goods at the new rate that they are producing and the excess supply that they have. They do not simply shut down the factories because doing so would make it harder to open up the companies in the event that the economy recovers and their products start coming in high demand. Also, shutting down factories leaves no room for further investments or improvements that can be made in order to make the products more desirable to consumers. •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 many problems that small, privately owned businesses do not. The main problem is that of the stockholders. These large corporations are faced with the prospect of losing money that they do not have and not being able to pay back their investors to break even, never mind make a profit. This may result in making the economy even worse as a whole, decreasing consumption of products, and eventual bankruptcy as a result of these inefficiencies. Small businesses only risk losing their own money and may take as many risks are they are individual willing to. •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 finally over it is likely that more people will work for small companies than big companies. This will result from the fact that small companies are willing to take risks and increase production when the competitions, the large corporations, are decreasing production. Personally, if I had the right qualifications I would want to work for a large corporation. Even though there are definitely risks, especially when the economy is in the condition it is right now, there is a pride factor in working for a large corporation. Also, when the economy recovers and the large corporations start to thrive once more, the salary earned in a large corporation will most likely be higher than those at a smaller corporation. Working for a large corporation also provides more opportunities for upward mobility through different departments and divisions whereas working in a small corporation will really limit these opportunities to only a few people. •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 big companies do when faced with falling demand for their products because they must still make enough money to satisfy their shareholders even though they must decrease production. By decreasing production they are hoping to sell of the goods at the new rate that they are producing and the excess supply that they have. They do not simply shut down the factories because doing so would make it harder to open up the companies in the event that the economy recovers and their products start coming in high demand. Also, shutting down factories leaves no room for further investments or improvements that can be made in order to make the products more desirable to consumers.
•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 many problems that small, privately owned businesses do not. The main problem is that of the stockholders. These large corporations are faced with the prospect of losing money that they do not have and not being able to pay back their investors to break even, never mind make a profit. This may result in making the economy even worse as a whole, decreasing consumption of products, and eventual bankruptcy as a result of these inefficiencies. Small businesses only risk losing their own money and may take as many risks are they are individual willing to.
•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 finally over it is likely that more people will work for small companies than big companies. This will result from the fact that small companies are willing to take risks and increase production when the competitions, the large corporations, are decreasing production.
Personally, if I had the right qualifications I would want to work for a large corporation. Even though there are definitely risks, especially when the economy is in the condition it is right now, there is a pride factor in working for a large corporation. Also, when the economy recovers and the large corporations start to thrive once more, the salary earned in a large corporation will most likely be higher than those at a smaller corporation. Working for a large corporation also provides more opportunities for upward mobility through different departments and divisions whereas working in a small corporation will really limit these opportunities to only a few people.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Nick14 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22478 Nick14 Thu, 15 Mar 2012 15:05:40 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22478 - Companies lay off workers because it is a much less drastic measure than shutting down their entire plant. If they had done that, then they would have no source of income. When firms do not shut down plants, it shows that they still hope the market for their product will improve. Should it show no signs of improvement, then they would be wise to shut down or move their plant. -Public companies have multiple issues to worry about. To begin with, they're huge, and so have large operating costs to worry about, as well as multiple salaries and benefits. Additionally, they have shareholders in their company. As a public firm, they are responsible for paying these shareholders above all other costs. As a result, they have multiple difficult decisions to make. A small private company has only its own (generally small) operating costs and limited salaries and benefits to pay. On account of their size, they have no shares to pay. -I think that more people will work for large companies, as their greater size would project the aura of invincibility. On the other hand, I would rather work for a small company, as there would be greater opportunity for advancement when the company began to grow. - Companies lay off workers because it is a much less drastic measure than shutting down their entire plant. If they had done that, then they would have no source of income. When firms do not shut down plants, it shows that they still hope the market for their product will improve. Should it show no signs of improvement, then they would be wise to shut down or move their plant.

-Public companies have multiple issues to worry about. To begin with, they're huge, and so have large operating costs to worry about, as well as multiple salaries and benefits. Additionally, they have shareholders in their company. As a public firm, they are responsible for paying these shareholders above all other costs. As a result, they have multiple difficult decisions to make. A small private company has only its own (generally small) operating costs and limited salaries and benefits to pay. On account of their size, they have no shares to pay.

-I think that more people will work for large companies, as their greater size would project the aura of invincibility. On the other hand, I would rather work for a small company, as there would be greater opportunity for advancement when the company began to grow.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Konstantin Frank http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22191 Konstantin Frank Sat, 03 Mar 2012 13:10:24 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22191 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? By shutting down factories, the company will have no income at all. By firing employees they have smaller expenses,but can still make some revenue. 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 do not only have to cope with their own decrease in income, but are also partially responsible to what happens with the money of their shareholders. A small privately owned business can afford it to have, for a short period of time, a smaller revenue, but a publicly traded company has a lot of pressure from outside to keep revenue up. 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 more people will work for small companies, as often they get higher incentives when the company begins to grow and small companies offer a higher job security. 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?
By shutting down factories, the company will have no income at all. By firing employees they have smaller expenses,but can still make some revenue.

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 do not only have to cope with their own decrease in income, but are also partially responsible to what happens with the money of their shareholders. A small privately owned business can afford it to have, for a short period of time, a smaller revenue, but a publicly traded company has a lot of pressure from outside to keep revenue up.

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 more people will work for small companies, as often they get higher incentives when the company begins to grow and small companies offer a higher job security.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Konstantin Frank http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22190 Konstantin Frank Sat, 03 Mar 2012 13:00:51 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22190 I think that it also depends on how is hired. If a young graduate from college goes to a big company after a recession due to the higher payments, he might not have been fired like a 40 year old guy, who got thrown out of a big company like for example BMW and had a hard time finding a new job. He will probably go for the small company as she provides probably less payment but a safer job. I think that it also depends on how is hired. If a young graduate from college goes to a big company after a recession due to the higher payments, he might not have been fired like a 40 year old guy, who got thrown out of a big company like for example BMW and had a hard time finding a new job. He will probably go for the small company as she provides probably less payment but a safer job.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: rpuri2 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22175 rpuri2 Thu, 01 Mar 2012 19:25:48 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22175 Nice post! I agree with your views on the first question. What do you think about the fact that it is more feasible to fire off someone than closing down a whole factory and for the future feasibility of increasing supply? Your response to the third question concurs with my view as well. Nice post! I agree with your views on the first question. What do you think about the fact that it is more feasible to fire off someone than closing down a whole factory and for the future feasibility of increasing supply? Your response to the third question concurs with my view as well.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: rpuri2 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22174 rpuri2 Thu, 01 Mar 2012 19:19:18 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22174 3. I agree with the article and support the view that after the global recession is over, more people will find themselves working for small companies. Small companies will have the skilled and the people with expertise in their fields, those individuals who had been sacked by large firms during the recession. Small firms had the option to pick the best from everyone; the large firms will be left with the runt of the pack, i.e. those who are less skilled. I, personally, would prefer to work in a bigger firm. Even though I would run the risk of getting fired when recession comes, working in a bigger fun does come with a sense of stability, i.e. the chances of the company going bankrupt is much less than it is for a smaller firm. 3. I agree with the article and support the view that after the global recession is over, more people will find themselves working for small companies. Small companies will have the skilled and the people with expertise in their fields, those individuals who had been sacked by large firms during the recession. Small firms had the option to pick the best from everyone; the large firms will be left with the runt of the pack, i.e. those who are less skilled. I, personally, would prefer to work in a bigger firm. Even though I would run the risk of getting fired when recession comes, working in a bigger fun does come with a sense of stability, i.e. the chances of the company going bankrupt is much less than it is for a smaller firm.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: rpuri2 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22173 rpuri2 Thu, 01 Mar 2012 19:19:02 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22173 2. Being a publicly traded company, society and individuals can invest into the firm and become stakeholders. This means that during times of recession, in order to keep the investment into the firm, the firm must find a way to please the stakeholders, thus adding pressure on to the company. One cannot invest in a private company, and all profits are retained for the private firm’s business and thus the pressure does not exist for such businesses. 2. Being a publicly traded company, society and individuals can invest into the firm and become stakeholders. This means that during times of recession, in order to keep the investment into the firm, the firm must find a way to please the stakeholders, thus adding pressure on to the company. One cannot invest in a private company, and all profits are retained for the private firm’s business and thus the pressure does not exist for such businesses.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: rpuri2 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22172 rpuri2 Thu, 01 Mar 2012 19:18:46 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22172 1. The first thing big companies do when faced with falling demand for their products is to lay off workers. This is because firing is more feasible and easier than shutting down factories. Their main aim, either way, is to reduce costs as falling demand causes losses in profit and revenue. Shutting down a factory would mean that when the economy is back in the recovery phase, getting the factory back is much more laborious and harder a task to do than it is to hire someone. Changing the amount of capital is a lengthier and time consuming process than is changing the cost of labour. 1. The first thing big companies do when faced with falling demand for their products is to lay off workers. This is because firing is more feasible and easier than shutting down factories. Their main aim, either way, is to reduce costs as falling demand causes losses in profit and revenue. Shutting down a factory would mean that when the economy is back in the recovery phase, getting the factory back is much more laborious and harder a task to do than it is to hire someone. Changing the amount of capital is a lengthier and time consuming process than is changing the cost of labour.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: rpuri2 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-5/#comment-22171 rpuri2 Thu, 01 Mar 2012 19:18:25 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22171 1 1

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: zphua http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22165 zphua Thu, 01 Mar 2012 10:54:11 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22165 Jessica Kenny, It was interesting that you mentioned about large firms being more stable. I find that it's a little ironic here. I get your point that big firms would not go bankurpu all of a sudden and is stable in that sense. However, this article is talking about big firms laying off workers during a recession. Is a big firm stable or not? My choice, however, was to work in a big firm. However, stability isn't the biggest factor for this decision. It was the big paychecks. I guess we cannot really say if a big firm is stable or not, as we have to trade-off one thing for another. Big firms may be more stable when the economy is good, and more unstable when there is a recession. Vicky=] Jessica Kenny,

It was interesting that you mentioned about large firms being more stable. I find that it’s a little ironic here. I get your point that big firms would not go bankurpu all of a sudden and is stable in that sense. However, this article is talking about big firms laying off workers during a recession. Is a big firm stable or not?

My choice, however, was to work in a big firm. However, stability isn’t the biggest factor for this decision. It was the big paychecks.

I guess we cannot really say if a big firm is stable or not, as we have to trade-off one thing for another. Big firms may be more stable when the economy is good, and more unstable when there is a recession.

Vicky=]

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: zphua http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22164 zphua Thu, 01 Mar 2012 09:27:17 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22164 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 AD falls, companies get less profit, hence by reducing cost, they will lay off workers. Shutting down factories could also reduce cost. However, laying off workers is an easier process than closing down a factory. If AD increases again, all the company does is to recruit workers again, which is relatively easy as full employment isn’t happening now. However, if they want to reopen factories, they would have to find a new piece of land, buy new equipment and do a lot of things. Hence, during a drop in AD, laying off workers would be a better choice compared to closing 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? A publicly traded company has an extra source of capital, invested by the stockholders. In times of recession, these companies would face the pressure given by all of these stockholders, who don’t want to lose money. A small, private company only has to satisfy the boss, hence face less 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? I think that after the global recession is over, more people will be working for small companies. These people had been sacked by those big companies, and understand that the risk of working in big companies will be more risky. Also, as they were recruited before the recession ends, some might feel grateful that the companies have recruited them and continue working for the companies. I would, however, rather work in a big firm. When the economy is normal, it is easier to earn money in big firms than in small firms. Besides, if I had the ability, I won’t worry about being laid off, even in a recession. 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 AD falls, companies get less profit, hence by reducing cost, they will lay off workers. Shutting down factories could also reduce cost. However, laying off workers is an easier process than closing down a factory. If AD increases again, all the company does is to recruit workers again, which is relatively easy as full employment isn’t happening now. However, if they want to reopen factories, they would have to find a new piece of land, buy new equipment and do a lot of things. Hence, during a drop in AD, laying off workers would be a better choice compared to closing 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?
A publicly traded company has an extra source of capital, invested by the stockholders. In times of recession, these companies would face the pressure given by all of these stockholders, who don’t want to lose money. A small, private company only has to satisfy the boss, hence face less 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?
I think that after the global recession is over, more people will be working for small companies. These people had been sacked by those big companies, and understand that the risk of working in big companies will be more risky. Also, as they were recruited before the recession ends, some might feel grateful that the companies have recruited them and continue working for the companies.
I would, however, rather work in a big firm. When the economy is normal, it is easier to earn money in big firms than in small firms. Besides, if I had the ability, I won’t worry about being laid off, even in a recession.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: KyleF http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-3/#comment-22162 KyleF Wed, 29 Feb 2012 20:31:44 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22162 Do you think that the worker benefits like health care and other services might be worth the risk of being laid off? Do you think that the worker benefits like health care and other services might be worth the risk of being laid off?

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: KyleF http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/comment-page-4/#comment-22161 KyleF Wed, 29 Feb 2012 18:45:51 +0000 http://welkerswikinomics.com/blog/2009/03/03/recessions-effects-on-small-vs-large-companies-some-evidence-in-support-of-the-classical-view-of-self-correction/#comment-22161 What about the other benefits of working in large firms such as health insurance and other benefits. Also there is the risk of a small business going under. What about the other benefits of working in large firms such as health insurance and other benefits. Also there is the risk of a small business going under.

Like or Dislike: Thumb up 0 Thumb down 0

]]>