TY - JOUR
T1 - Cost-benefit analysis of organizational interventions
T2 - The case of downsizing
AU - Birati, Assa
AU - Tziner, Aharon
PY - 2000
Y1 - 2000
N2 - This article advocates a new approach to assessing the desirability of downsizing. The model treats downsizing programs the same as any other projected investment by a firm. The steps involved in reaching a decision include: (a) Estimation of cash outflows at the initial stage of the process regarded in this paper as the investment in the downsizing project; (b) Assessment of the net inflow from downsizing; (c) Estimation, on the basis of (a) and (b), the real, post-tax rate of return on the downsizing plan and comparison with the real, post-tax cost of capital to the firm; (d) Ranking and comparing the downsizing project to all other potential investments. The final decision of whether to accept or reject a downsizing plan will then depend on the relative desirability of the project (when all other non-quantitative considerations are also evaluated) to other investment alternatives, taking into consideration the limited resources of the firm for capital spending.
AB - This article advocates a new approach to assessing the desirability of downsizing. The model treats downsizing programs the same as any other projected investment by a firm. The steps involved in reaching a decision include: (a) Estimation of cash outflows at the initial stage of the process regarded in this paper as the investment in the downsizing project; (b) Assessment of the net inflow from downsizing; (c) Estimation, on the basis of (a) and (b), the real, post-tax rate of return on the downsizing plan and comparison with the real, post-tax cost of capital to the firm; (d) Ranking and comparing the downsizing project to all other potential investments. The final decision of whether to accept or reject a downsizing plan will then depend on the relative desirability of the project (when all other non-quantitative considerations are also evaluated) to other investment alternatives, taking into consideration the limited resources of the firm for capital spending.
UR - http://www.scopus.com/inward/record.url?scp=0034358564&partnerID=8YFLogxK
U2 - 10.1023/A:1007894018069
DO - 10.1023/A:1007894018069
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AN - SCOPUS:0034358564
SN - 0889-3268
VL - 15
SP - 277
EP - 286
JO - Journal of Business and Psychology
JF - Journal of Business and Psychology
IS - 2
ER -