Write one key takeaway per chapter. Write at least 100 words for each chapter summary.
In chapter one we learned the main ideologies of economics and how we as future managers should focus on making critical decisions that will impact our future businesses if we choose to build on them. We really dig into learning about economics and how we can understand it to base decisions on potential increases or decreases with-in sales. We also learn that business decisions are based off of predictions of future sales in our company. Learning about economics helps us develop a stronger prediction of the future in opposition to other common methods of forecasting. As a manager we learned that it is important that we focus on broader changes rather than sticking to specific numbers.
In chapter two we learned the basics of the economy and what the different terms are as they will be used consistently in the industry. A key take away from this chapter that I had was learning about what the difference is between GDP, real vs nominal GDP, and GNP. Where GDP otherwise known as Gross Domestic Product is what the total value of goods or services are alloted with in that given year, where Real versus nominal GDP is what you do to measure the output of constant price against using the current price, and lastly what GNP is otherwise known as Gross National Product and that’s what the total value of different goods and services are when theyre being provided and it is usually from investments that are typically foreign.
In Chapter Three we focused in on how managers need to have an understanding on how to manage recessions and be able to notice patterns with in information gathered so that they can develop an understanding on when they are coming. This is so that they have a plan when a recession in arising allowing them to stay on top of the recession or downturn so that they do not end up going under. We learn about what the causes of recessions are being that there are an excessive amount of goods but there is not a strong enough amount of services that can be provided. This ends up leading to a higher rate of unemployment. As a manager being able to get an understanding of how to anticipate a recession or a downturn is essential to the success or failure of a company.
In Chapter Four we learned about inflation, the recession triggers, and profit squeezes. Focusing in on what a manager needed to monitor is the prices of major inputs and its major outputs. We learned about inflation and the federal reserve policy. In which we took a look at The Phillips Curve. This is when workers had been demanding higher wages due to expecting higher inflation. What this ended up causing was production cost increasing which then caused a decrease in production as well as employment. Learning about making business decisions and profit squeezes was essential to this chapter because we as potential future managers learned that Its easier to pass on cost increase when 1. Competitors are facing the same cost increases, 2. Expanding services bundles, and 3. Our customers can pass the cost increase along to their customers. Lastly we focused on how accurate our measurements are when it comes to inflation and that it is important that were use CPI to measure inflation as it is the most accurate way for us to measure inflation.
Chapter five we focused on downturns, specifically how to prepare for a downturn. A key take away from this chapter that I have been thinking about is specifically what a manager needs to be able to monitor. We started to understand that we need to be able to assess a company’s vulnerability to a recession and once we understand its vulnerability we have to then draw out an idea to creating a contingency plan that will be used to deal with a downturn or recession. As a manager we have to be able to build flexibility with in our day to day operations so we can pivot when necessary. Lastly we also learned that we have to be able to develop a system that allows us to identify downturns in the coming future.
In Chapter Six we focused on learning how to watch out for different issues that may arise. We as managers have to be able to put out a macroeconomic warning signal, a customer sales forecast, critical costs, and end-users information. These are all items that will be used on a frequent basis. Macroeconomic warning signals is a early warning system that includes indicates the overall economy for the industry, a customer sales forecast is used to monitor a companies own clients. We should be able to have sales reports by groups, and different regions. For critical costs we as a company should be paying attention to costs. Companies that we learned about that need to be focusing on this the most are usually manufacturers, utilities, and contractors. Finally we learned about end-users information and that companies should be focusing on brand specific sales to their own company.
In chapter seven the chapter focuses on managing through a business cycle. A key point that I took away from this chapter was that managers need to have to be prepared for a potential downturn with-in the economy. What we take away from this chapter is understanding the steps and opportunities we can get from understanding the business cycles. We learn about how moderate steps is used to cut out the majority of our capital spending while freezing possible hires, but if you have to take survival steps this happens when you have to cut your capital spending entirely to keep your company above ground. To manage in a recovery you have to have a plan a part of this plan that could work is knowing what is the appropriate amount of employees that you should be rehiring as well as figuring out how to gain back any resources and services that had been lost through the recession or down turn.
Chapter Eight focuses on the foreign economic cycles. A key take way that I had learned from this chapter is that there are a lot of different risks with foreign economic cycles such as trading partner risk, and foreign exchange risk. Trading partner risk is more affected with in smaller countries. In the chapter it goes into detail that the reason this happens is because there is a risk with in goods and services that are provided by their very own trading partners. We also learned about foreign exchange risk and that it can vary in different countries for different reasons. The main reason that we learned about is that there are different currencies that end up causing different exchange rates and has prices to potentially fluctuate.
In Chapter Nine we learned about the regional economic cycle, but specifically in our own local economy. They key take away that I learned from this chapter is being able to assess the risk of a regional recession, and being able to then monitor what the national economy is with in their own respected regions. If you are a company such as the Bank of New Hampshire for example. You should be focusing on your economy in regions for the state, but you also should be checking the regional economic cycle to see if it is pretty similar to your regions economy. You can tell if you are potentially going to go into a recession based on how similar your regions economy is to the national economy overall.
The key takeaway that I took from Chapter Ten Industry Cycles is that we need to be monitoring our own industries cycles because you may experience routine cycles of price wars, and over-capacity and over-investments. This chapter focused mainly on capital-intensive industry and why they are so different than other industries. The reason that they are so different is because they way more likely to end up in a situation where they get over-investments and that in the long run is not profitable for their operation. The way that managers have been able to manage through these industry cycles is by understand what needs to be focused on during economic booms, and during its downturns as well.