A manager needs to develop an early warning system that includes:
Macroeconomic warning signals End-user info 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. |
Three indicators would be GDP, inflation, and employment figures. When forecasting macroeconomics you should always be skeptical about the news and information you gather. A lot of the news are made to look extra for consumers.
Even though the end users do not have to be the actual consumers the data from them are still relevant for your business. If you cannot retrieve any good data from your business you will have to use competitors data instead.
Your business current sales reports should always include a “drill-down” of major surprises. Products and regional breakdowns must be used when new products or territories are added. Pipeline forecasts are useful for companies making large one-time-only sales. 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.
What is hard for people t realize that even if you prepare everything perfectly, it still might not go as you predicted things to go. Succesful managers are aware of this and will learn from it and move on.
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.
Seasonal adjustment is the concept of how sales and economic development changes throughout the twelve months of the year.
Describe the characteristics of the following events briefly.