The influences of the downsizing strategy on business structures

Abstract

Purpose:

This paper investigates the effectiveness of the downsizing strategy when applied to the Telefónica case.

Design/methodology/approach:

By using the Event Study method, we present the relationship between downsizing strategies and results. Statistical significance of results was analyzed using t-statistics analysis.

Findings:

Results are significant, proving that the downsizing strategy brought about greater profitability and better funding, leveraging company market values.

Originality/value:

Results indicate that downsizing is a strategy alternative that allows for better adaptation, if carried out proactively and associated to changes that are necessary within organizational structure and processes.

Keywords:
Downsizing; event study; strategy; Telefónica