Internet Exercise #1

Industry downsizing has been a major part of the corporate world; even government agencies are downsizing. GovernmentExecutive.com "covers the business of the federal government and its huge departments and agencies - dozens of which dwarf the largest institutions in the private sector" on its website. The website includes an article (accessible at http://www.govexec.com/reinvent/downsize/0795mgmt.htm) entitled "Industry's Downsizing Lessons," dated July 1, 1997, from Government Executive Magazine, that emphasizes the effects of the reduction in operating leverage (that is, a reduction in fixed costs).

Read the article and answer the following questions:

• Which industries have substantially reduced fixed cost commitments? Do you believe this reduction in costs has substantially impaired the ability of these industries to meet the needs of their customers?
• The article also mentions an auto company which downsized and suffered negative consequences. If possible find out why this company suffered a downfall.
• The public utility industry is listed as an industry with high fixed costs. The article notes that this industry has not had to undergo downsizing. Is this statement still true? (Note: how about Enron? How about the California Electricity Outages in 2001?)
• The article lists the four lessons of operating leverage. The lessons revolve around the costs (or benefits) associated with downsizing. Review one (or two) of these lessons, and comment on the lesson(s).
• Briefly discuss the articles' concern that excessive cutting of fixed costs (best described as the cost of preparedness) has (or could) substantially impair the country's ability to respond to "problems" in several different parts of the world at the same time. Does the group think that cuts in defense department spending are "riskier" than cuts in the private sector? Why?

Internet Exercise #2

Perform an Internet search using the term, break-even analysis. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor's lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 - 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)

Internet Exercise #3

Perform an Internet search using the term, degree of operating leverage. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor's lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 - 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)