A manager needs to develop an early warning system that includes: - Macroeconomic warning signals - End-user information - Customer sales forecasts - 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. |
This section was about warning systems that the management teams should be able to pickup on if there were change in sales environments. Up above I listed the four bullet points which are key factors for a monitoring system.
The biggest takeaway I got is to keep an eye on the end user of your product, no matter how far your involvement from that end user is. This information is easier to obtain for some companies than others.
Having good practices is always beneficial. The best practice is usually to provide the senior management team with a small summary (no more than a paragraph) and with a staff analysis about details involving the summary. Lastly sales forecasts should be developed in a large group consultation with customers for ongoing sales.
The costs should always be one of if not your earliest warning system. Manufacturers and contractors especially. Any large cost of operating expenses should be written down.
Managers need their evidence, without their evidence there would be a complete toss up in certain prodcut sales.
Explain 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.
Itβs a certain technique that is meant to even out periodic swings in the form of statistics or certain movements in supply and demand related to the changing seasons. By no means is it perfect.