I know lay-offs seem to be happening a lot, especially in tech right now, and can happen at any point – but just this month there has been Microsoft, Discord, Twitch, Google and RIOT lay-offs to name a few, and I’m sure many others.
Unless it’s just coincidence, why do these lay-off announcements seem to be like a chain reaction? I’m guessing that there must be economical reasons as to why, such as boosting numbers before a certain reporting season? Or is it just to stay competitive in terms of profit margins?
In: Economics
Its not what is happening exactly in this month, but a lot of general cases are traditional business signaling.
So generally these companies either can’t (for legal reasons) or won’t (for competitive reasons) coordinate things in the industry. However there is a business move that you can do ‘signaling’ that you are doing something and thats also the go-ahead signal for others in the industry to do the same, now that you’ve done it and they can do the same to stay competitive, probably because they have the same exact issue as you do.
This is a pretty common tactic used a lot in price changes, such as airlines or cable companies will announce price changes, and within a month or so all the others in the industry will magically announce price changes too, how convenient!. It also happens during labor force draw downs— especially if you are a public company. Why? Because the market sees it happening, and generally when these occur, stock value increases, so once someone went first, their stock popped, and the best business move is for you also to have your stock rise. Stock rises of 10% (which is great!) are not uncommon. You may not think this way, but the execs and owners of these companies certainly do
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