At big companies, if it is done right, the upper level management may ask for input from 1st line managers as to who they should fire. Also, my last company, all managers had to rank their underlings, and those at the bottom had a chance of being trimmed if there were layoffs.
Many big companies will listen to those first line managers, and almost any upper-level manager is aware of their lack of knowledge about the leaves of the management tree.
They will then look to trim off "luxury expenses" and if they are not a tech company, having a full time IT/dev guy is likely to be one of them.
Large and small organizations can both have politics, can see drastic restructuring when business changes or a major client makes a change (drops a product, demands a change, ...). Large companies may insulate somewhat against capricious changes, though non-operational circumstances (particularly mismanagement or liquidity crunches of the holding corporation) can cause sudden and drastic changes (Borders, UAL, American Airlines). Small companies can have cash-flow issues as well.
There's very little that's assured in life. Death and taxes you can count on.
Why do they have to be clueless? Projects are never failures? They could cut a terrible project and still end up laying off good people. Is that a bad thing?
It cuts both ways, for sure.
As far as large companies go it gets a lot worse than VMware though they seem to have lost direction somewhat.
The problem of largeness is that decision makers are so far removed from the decision they can't possibly make good decisions. It's certainly possible for small companies to make bad decisions as well.