A manager needs to develop an early warning system that includes:
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. |
-The system picks up a broad-based slowdown in economic activity. The macroeconomic indicators that a firm selects to monitor can be as simple as the manager keeping an eye on the news, or they can be sufficiently sophisticated that a professional economist is hired.
-The end user may not be your customer. Company’s need to monitor the buying ability and levels of their end users.
-Product and regional breakdowns must be used when new products or territories are added. Sales forecasts should be developed in consultation with customers for ongoing sales.
-You should put costs in the early warning system if your company’s expenses are dominated by one or a few major items subject to large price swings
-The hardest thing for most people to accept is that things don’t always go as expected. The most successful managers are open to evidence of changing conditions. Many businesses are also saved by careful attention to the early signs of economic downturns.
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.
-Describes the statistical process showing normal seasonal fluctuations are removed from the data, showing the change from month to month reflects everything except normal seasonal fluctuations.
Describe the characteristics of the following events briefly.