Reducing the size of a company by eliminating workers and/or divisions within the company.

It is sometimes referred to as "trimming the fat".


When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability.

  1. Reorganization

    A process designed to revive a financially troubled or bankrupt firm. A reorganization ...
  2. Outplacement

    Assistance provided through a third-party company and paid for by a former employer ...
  3. Severance Package

    A bundle of pay and benefits offered to an employee upon being laid off from ...
  4. Horizontal Integration

    The acquisition of additional business activities that are at the same level ...
  5. Vertical Integration

    When a company expands its business into areas that are at different points ...
  6. Rationalization

    A reorganization of a company in order to increase its efficiency. This reorganization ...
  7. Restructuring

    A significant modification made to the debt, operations or structure of a company. ...
  8. Severance Pay

    The compensation that an employer provides to an employee who has been laid ...
  9. Gray Market

    An unofficial market where securities are traded. Gray (or “grey”) market trading ...
  10. Supply Chain Finance

    A set of technology-based business and financing processes that link the various ...
Related Articles
  1. Planning For Unemployment

    Planning For Unemployment

  2. Taking Advantage Of Corporate Decline
    Bonds & Fixed Income

    Taking Advantage Of Corporate Decline

  3. Who are Venture Capitalists?

    Who are Venture Capitalists?

  4. Vertical Integration
    Investing Basics

    Vertical Integration

  5. Business Cycle

    Business Cycle

  6. Weighted Average Cost Of Capital (WACC)

    Weighted Average Cost Of Capital (WACC)

  7. What is a monopoly?

    What is a monopoly?

  8. Capital Expenditures (CAPEX)

    Capital Expenditures (CAPEX)

  9. Working Capital

    Working Capital

    By Free
  10. What is the difference between

    What is the difference between "hard ...

comments powered by Disqus
Hot Definitions
  1. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  2. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  3. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  4. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  5. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
  6. Negative Carry

    A situation in which the cost of holding a security exceeds the yield earned. A negative carry situation is typically undesirable because it means the investor is losing money. An investor might, however, achieve a positive after-tax yield on a negative carry trade if the investment comes with tax advantages, as might be the case with a bond whose interest payments were nontaxable.
Trading Center