Downsizing can have which outcome?

• A. It increases production complexity
• B. It reduces costs of wages and rent
• C. Valuable skills and knowledge are lost through making redundancies
• D. It guarantees market expansion

Answer: (C)

Downsizing reduces the workforce to cut costs, so it’s common to see immediate savings in wages and rent. But the big, lasting consequence is the loss of valuable skills and knowledge when redundancies occur. Experienced employees carry tacit know-how, customer relationships, and problem-solving routines that aren’t easily replaced. When they leave, the organization can struggle with slower learning curves, reduced efficiency, and higher training and onboarding costs as new staff try to fill the gaps. That potential loss of capability makes the outcome described in this option the most significant. While cost savings can happen and downsizing doesn’t guarantee market expansion, the disruption to skills and knowledge is the clearest, impactful consequence.