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LSDefine
Simple English definitions for legal terms
shakeout
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A quick definition of shakeout:
Shakeout: When there are too many businesses in an industry and they can't all make money, some of them will have to close down. This is called a shakeout. It happens when there is a lot of competition or prices are going down. The weaker or less successful businesses are the ones that usually have to close.
A more thorough explanation:
Definition: A shakeout is when weaker or unproductive businesses in an industry are eliminated, especially during a time of intense competition or when prices are decreasing.
Example: During the recession, many small businesses were forced to close due to the economic shakeout.
Explanation: The example illustrates how a shakeout can occur during a period of economic decline. As businesses struggle to stay afloat, those that are weaker or less productive may not be able to compete and may be forced to close. This can lead to a consolidation of the industry, with stronger businesses surviving and potentially gaining a larger market share.