A manager needs to develop an early warning system that includes: macroeconomic warning signals, end-user information, customer sales forecasts, and critical costs.
Managing through the Business Cycle
| Steps | Description |
|---|---|
| macroeconomic warning signals | The early warning system should include indicators for the overall economy and the relevant industry. |
| end-user information | For example, a bottle manufacturer should watch sales of beer and soft drinks. A fabric manufacturer should watch apparel sales. |
| consumer sales forecast | A company should also monitor its own clients. A manager should break out sales reports by product groups, regions, and customers to trace major surprises in sales. |
| critical cost | The companies that need pay the closest attention to costs are usually manufacturers, utilities, and contractors with with significant exposure to one or two raw materials with typically volatile prices. |
Watch the overall economy, and the major sector most relevant to a company. The level of fast spending vs. saving is an indicator of the major sector. News or hored economist to watch for the signs. Forecasting and creating a plan is the best way to compbat recession long term.
The end user is the focus, have to look at consumer spending and consumption of products to understand what is going on specifically in the market. Watch end user of product, no matter how far out the consumer is, from retail customers, to international customers. Services to engage you to consumer trends are costly, but worth the investment for large companies who are planning for recession.
Third piece is tracking your direct consumers, this has to do with both the sales occuring and sales forecasted. Significant consumers and companies are top priorities, or based on one specific product or service. Staff analysis on sales and research on trends that could increase growth are expected from managers and are numbers or projections. Estimated success is a big part of this section.
Large portion of operation costs should be a piece of this section, which has sharp direction in revenue vs. loss, so that a business can prepare for recession and how they will be able to spend or afford services or material in order to continue selling. Trends on raw material is important because of the scarcity and high spikes of price depending on the supply and demand of them.
Things don’t always go as you expect, be willing to adapt and play it on the fly, Forecasts are great tools, but don’t always prove to be correct in the global markets and general economy. Good managers will assess and change things to create balance in the plan in order to successfully keep profits afloat. Always adapt and watch for new trends or cost efficient changes, and look back on economic information as well as future and present information. Data analysis is real and important to successful business.
Explan each of the following terms in your own words. The author explains the terms in the textbook. If necessary, you may also Google the term on the Web. Good resources include:
Explain the terms in your own words briefly.
A seasonal adjustment is a statistical technique designed to even out periodic swings in statistics or movements in supply and demand related to changing seasons. It can, therefore, eliminate misleading seasonal components of an economic time series. ## Economic events
Describe the characteristics of the following events briefly.