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. |
Be cautious of listening to individual forecasts highlighted on website or article, typically professional forecasters are clumped together saying relatively the same thing. Additionally it’s also equally important to watch the data as they are released by government agencies.
No matter how far your product is removed from the end user, it’s good to watch the end user of your product. They may not be your customer but you need to monitor their buying ability and levels of their end users.
Current sales reports should include a “drill down” of major surprises. When new products or markets are added product and regional breakdowns should always be used. When companies are making a large one-time-only sale Pipeline forecasts are useful. Also sales forecasts should be created in discussion with customers for ongoing sales.
Companies should include any costs into their early warning system if they make up a large portion of operating expenses and are subjected to price swings.
IF the basis of a view are proved incorrect, the view itself must be abandoned. Watch for market warnings, pay attention to your end user no matter how far removed you are from them. Practice makes perfect but use any tools you can given to you to help you make a more informed decision
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.
When examining the data many companies have seasonal patterns such as “around the holidays” that must be taken into account and considered Through twelve-month percentage changes,formal seasonal adjustment or graphical methods.
Describe the characteristics of the following events briefly.