Click this sentence for the article.

On the December of 2008, video games developer and publisher, Electronic Arts, increased its plan to cut jobs to 1,000 jobs, while also closing or consolidating nine of their studios and publishing locations. This act will save EA savings of about $120 million a year, and will cost around $65 million. As well, EA plans on cutting back the number of projects they work on, and will focus on releasing top-selling games.

The actions that Electronic Arts took, from cutting jobs, to refocusing their projects, have to do with several economic concepts that we have studied. These economic concepts are; scarcity, trade-off, choices, and the PACED decision making system. Scarcity applies to this situation, as the scarce resource is money to support the number of workers in EA before the plan takes effect. Although there is no infinite demand for workers, there is not enough money for the company to pay the workers and still make a profit. The trade-off here is that the company trades a portion of its workforce to save money in the face of the recession. Electronic Arts’ decision to make this choice can be compared to the PACED decision making system, the problem here is that Electronic Arts needed to act properly to prevent financial problems due to the recession. The alternative that the company took was to cut jobs. Another possible alternative was to limit pay raises, or cut workers’ payments. The executives would have evaluated their options, and chosen the best one, although they might not have used criteria to help them. Their final decision being to cut jobs.

There were several reasons why I had chosen this article. The main reason is that it is an article about how one of my favorite video game developer/publisher reacted to the recession. I am a fan of a few Electronic Arts’ franchises and games (such as the Need for Speed franchise), and am inclined to be interested in the company that develops games that I like. Additionally, although the article is short, it is a topic that involves the economy and a company making a decision based on the state of that economy. I was able to relate several of the concepts we have talked about to their decision to lay off 1,000 jobs, these concepts including scarcity, and the PACED decision making system.

Citation

Electronic Arts to Cut 1, 000 Jobs. (2008, December 20). Daily Herald (Arlington Heights, IL), p. 1. Retrieved September 6, 2010, from Questia database: http://www.questiaschool.com/PM.qst?a=o&d=5033750575

Advertisements