Downsizing involves what?

• A. Involves outsourcing all non-core activities
• B. Involves closing down an unprofitable division or merging two divisions together
• C. Involves expanding all divisions to new markets
• D. Involves increasing staff

Answer: (B)

Downsizing is about reducing the size of the business to cut costs and streamline operations. This often means shutting down divisions that aren’t profitable and consolidating or merging units to remove duplicated functions and lower overhead. By shrinking the scope and footprint of the organization, resources can be focused more efficiently on what remains profitable.

Other options describe growth or externalizing work rather than cutting back in size, so they don’t fit downsizing. Outsourcing all non-core activities moves work outside the company; expanding divisions or increasing staff expands the organization rather than reducing it.