There are always coming and going trends. Some companies rely on these trends. How can such company react to a shrinking market because the product just isn’t in high demand anymore and isn’t expected to in the foreseeable future.
Is there any way for a company to shrink in a healthy way just like it once grew?
In: 4
Of course, you either develop new markets and products to make up for the revenue from the shrinking market or you cut expenses off on the spending side to make up for the lost revenue.
Often paying labor is the most expensive line item on the books, which is why you often hear about layoffs in conjunction with “shrinking” or falling markets, or another word for that: demand.
If companies do not do these things, they can’t pay their bills and they have to close or get bought up by someone who has saved money or capital for these moments in cycles and can buy businesses for less than during good times.
This is why you also hear about mergers and acquisitions often during “shrinking markets”.
Latest Answers