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. |
There are many macroeconomic indicators that companies can track. These indicators track specific information about the economy and industry.
It’s important that companies keep track of the buying ability and levels of their end users. The end user may not be your customer.
Companies will benefit from including sales forecast and sales data in the early warning system if they are selling to other companies or projects that involve a longer sales process. Accurate sales data and sales forecasts allows companies to assign resources for growth in the future.
It’s is very important to include cost elements in early warning systems for companies involved in specific industries; some examples of companies that need to monitor costs are manufacturers, contractors, or utilities. These companies could easily be surprised by cost increases.
Being open and able to adapt to change can lead to success as a manager. Regularly monitoring data can help you better interpret the data, and understand the economic environment.
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.
This term refers to the statistical procedure whereby a normal seasonal fluctuation is deleted from the data resulting in a change from one month to the next that reflects everything but the regular seasonal variation.
Describe the characteristics of the following events briefly.