An economic downturn is a general slowdown in economic activity over a sustained period of time.

It
can happen in a specific region

An economic downturn may directly or indirectly affect your business.

Be prepared by analyzing the risks to your business and putting strategies in place to reduce and survive
the impacts of a downturn.

An economic downturn, or a downturn, occurs when the value of stocks, property, and commodities fall,
productivity either grows more slowly or declines, and the Gross Domestic Product or GDP shrinks,
stands still, or expands more slowly. Likewise, it is part of the economic cycle and may directly or
indirectly affect your business. For instance, it is the natural fluctuation of the economy between
periods of growth and contraction. Furthermore, we sometimes refer to the economic cycle as the trade
cycle or business cycle. In most cases, a downturn refers to the downward movement on the graph.
However, analysts and the press sometimes use the term when talking about a slowdown in growth.
During a downturn, business managers consider either cutting jobs or cutting salaries, making the
unemployment rate higher and a lot of people, including investors, lose money. Therefore, every entity
manager must be prepared by analyzing the risks to their business and putting strategies in place to
reduce and survive the impacts of a downturn.

A downturn in the economy, also known as an economic slump, takes place when the value of
stocks, real estate, and commodities falls, productivity grows more slowly or decreases, and the Gross
Domestic Product (GDP) either decreases, remains the same or expands at a slower rate. In a similar
vein, it is a normal component of the economic cycle and may have direct or indirect effects on your
company. For instance, the natural ebb and flow of the economy between expansion and contraction
looks somewhat like this: In addition, the business cycle and the trade cycle are both common synonyms
for the economic cycle. Typically, when people talk about a downturn, they mean the downward trend
on a graph. On the other hand, economic analysts and journalists will occasionally use the term when
talking about a deceleration in economic growth. It is common practice for business executives to
contemplate laying off workers or reducing pay during economic downturns. This has the effect of
driving up the unemployment rate and causing financial hardship for a wide variety of people, including
investors. As a consequence of this, it is the responsibility of every manager of an entity to be ready for
a recession by identifying the threats to their firm and developing strategies to both minimize and
endure its consequences.

During a downturn, the instance where in managers shall decide whether they should cut
salaries or cut people. They must consider decision criteria such as practicability, risk reduction,
corporate image, employee engagement, legality, and their performance management system.
Moreover, they should consider all of the possible outcomes or the pros and cons of their chosen
solution. In this case study, it is advised to lay off employees because when a company decreases
employee pay, the top performers are often the first to leave, frequently joining a competitor. This
eventually leads the firm's revenue to fall even faster. In contrast, if a company decides to stop listing
people, it can pick who leaves, presumably letting go of its less productive personnel. Hence, in order to
make the entity survive and thrive in the long run, cutting people is recommended.

When the economy is struggling, managers are faced with the difficult decision of whether or not to
reduce employee compensation or headcount. They are required to take into account a variety of choice
criteria, including practicability, risk reduction, company image, employee engagement, legality, and
their performance management system. In addition, students need to think through all of the many
outcomes that could occur as well as the benefits and drawbacks of the answer that they have chosen.
When a company reduces the salary of its employees, the employees who do the best are typically the
first to leave, and they frequently go to work for one of the company's competitors. Therefore, it is
recommended that employees be let go in this particular case study. Because of this, the company's
revenue will inevitably continue to decline over time. In contrast, if a company decides to stop listing
people on its website, it has the ability to choose who departs, and it will likely let rid of its employees
who are less productive. As a result, it is recommended that people be eliminated in order to ensure the
continued existence of the entity and its further growth over time.