Scenario 6.1
In 2003, managers at Bambino, a national retailer of baby products, noticed that sales and profits were slumping. Store managers were ordered not to fill any vacant positions, which saved some money. However, by January of 2004, it was essential that Bambino cut expenses further. The firm decided to offer incentives for early retirement to some of the more senior top managers. Many of them decided to voluntarily leave for retirement or other jobs. Expenses still remained high, and in May, the firm asked store managers to reduce staff by laying off 10 percent of their workers (about two workers per store). When those cuts were still not enough, management called for store closings in some locations. For example, in Phoenix the store closing was announced to employees on August 1 and accomplished by December 1. In locations where stores were not closed, managers were ordered to terminate any underperforming employees, identified by low performance appraisal scores on the last two evaluations.
-Refer to Scenario 6.1. Which of Bambino's actions is likely to have a positive impact on profitability in the long term?

Question

Quizplus · Accepted Answer

Each of the actions taken by Bambino—early retirements, layoffs, store closings, and relying on natural attrition (not filling vacant positions)—are measures to reduce costs. In the long term, these actions can lead to improved profitability by lowering operating expenses and focusing resources on more profitable areas.

Scenario 6.1 In 2003, Managers at Bambino, a National Retailer of Baby