The influences of the downsizing strategy on business structures

Abstract

Purpose – This paper investigates the effectiveness of the downsizing strategy when applied to the Telefonica 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.