Write one key takeaway per chapter. Write at least 100 words for each chapter summary.
In this chapter I found about one key takeaway that forecasting and all the areas of economics you have to analyze that aren’t forecasting are a very important and complicated set of tasks and so I split this into four major parts . 1 Understanding economics can help you to diagnose the causes of increases or decreases in sales volumes and costs. understanding economics helps you understand the various moving parts of an active market. 2 Business decisions are about the future and must rely on a view of the future. Demand for certain materials or services and the companies which supply that will always fluctuate. For example look at Sears everyone used to go there and now they barely exist. 3 Economics can help you form a more accurate vision of the future, compared to other common methods of forecasting.4 As a business manager, you should focus more on the broad magnitudes of changes rather than specific numbers.
In chapter 2 we learned how to best monitor your sector of the economy. One key takeaway I got from this chapter was even if its just your sector of the economy there are still so many parts you have to look at and how a manager needs to know The time when upturns and downturns will happen in sales along with when the economy accelerates or slows down. The manager would also like to know how deep the decline will be, how steep the increase will be. How long sales will be depressed or how long the boom might last for. Can the company raise prices without losing too much in sales? The manager also would like to know when costs are going to rise or fall. The economy plays a large role in the rising and falling of prices. and how the economy is always changing and how that effects things like the economic cycle, consumer spending, housing, and capital spending just to name a few areas.
The major takeaway I got from this chapter was really how impactful supply shocks are on the economy. Such as when A sudden increase in an essential commodity can tip the economy into recession. A good example is the oil crisis of the 1970s. I also learned that a manager needs to know Managers need to know how to anticipate recessions. They need to know causes of previous recessions, typical things which cause recessions, and the signs that a recession is about to hit. Additionally I learned about how foreign business cycles and trade wars could cause recession and downturn so you have to anticipate for these.
A major thing which I learned from this chapter was how inflation, unemployment and contract prices were so related to inflation and could be triggers along with squeezzing the profit. I also learned the effects of the CPI PPI and the meaning of the phillips curve. Consumer Price Index (CPI) measures of the average change over time in the prices which are paidby urban consumers for a market basket of consumer goods and services. Producer Price Index (PPI) measures the average change over time in selling prices recieved by domestic producers for their output. These prices included are from the first commercial transaction for many products and some services. The Phillips Curve The phillips curve states that inflation and unemployment have an inverse relationship. Higher inflation is often associated with lower unemployment, lower inflation is often associated with higher unemployment. Additionally I saw how stagflation is the simultaneous appearance in the economy of slow growth, high unemployment, and rising prices I never knew about this before taking this class.
A takeaway I had for this chapter was how many different steps you need to include when planning for a downturn specifically the vulnerability assessment Ask how vulnerable is our company to a recession? You want the sales data for the company however this can be difficult because its often not available or unreliable. Instead often the national data on the company’s industry is used. Once we have this data it is then assessed against the GDP data, the contingency plan A plan designed to help a company take the needed steps if a future event takes place, and building flexibility into the business. This is also important when considering contracts or how many people to hire even if your going to setup shops in different countries.
A major takeaway I had from this chapter out of the many parts of the warning system in this chapter was the macroeconomic warnings and how they help to watch the overall economy and major sectors that are most relevant to your company. The system can pick up broad based slowdowns of economic activity. The system at it’s highest level should be formalized however it’s acceptable to have it as simple as a few charts or lines of data as that is sufficient to cover major data series which then show changes within the economy. I also learned how important End user information was and consumer sales forecasts this is especially important to see how your sales are going to thrive or if you need to start thinking about making more of the product.
A major takeaway I took from the chapter was how even in a recession a manager can manuever themselves to be in the best spot possible for the current state of the economy of their company I already had somewhat of a grasp on the easy and moderate steps but did not have much knowledge regarding with Survival steps and especially taking advantage of recessions Capital spending is stopped, and assets are going to need to be looked into as well, cutting employment is necessary, along with the sales staff needs to be leaned out but still there. Inventory should be kept lean, then the company needs to be getting cash to hold, and delaying payments are also important. If all goes south sell it(the business). AND Taking advantage of recessions Using advantages based on competitors disadvantages is the best possible way to blossom through a recession, lower operating costs, less materials used and purchasing is made easier due to lack of bills, and more money to spend because of less payout.
A major takeaway I had from this chapter was all the different elements of foreign economic cycles a manager needs to monitor such as business cycles and markets and subsequently for this also how the world is becoming increasingly more integrated and has been for soem time so correlation among various economies of the world are increasing. Meaning we go up and down more in unison than we used to and so were more interdependent on each other and a good manager needs to know the global situation as it will most likely affect their company in a way. I also learned how supply shocks can affect foreign economic cycles, and how monetery policy can vary around the world
A major takeaway I had from this chapter which i thought really related to local economy was how long term regional growth was driven States which have rapid population growth tend to have a secure growth pattern and this subsequently creates increased revenue flowing into that state. States with similar patterns to the national economy show positive impacts in their region in relationship with the importance of their industries. Additionally when people want to work they are going to a region they enjoy and thus work there. If more people enjoy this region it is extremely likely more people are going to live and try to work there.
An important takeaway I had from this chapter was how to manage through the industry cycle as at the end of the day you’re in it good or bad you may as well learn how to deal with it best. I found the best way to make it through is Managers and capital intensive industries would be best off recognize their industries capital intensity Business leaders should understand the typical lengths of expansions within their industries. managers also should understand patterns of past business cycles. In times of economic boom, add amassing cash instead of more capacity. In weaker times you should buyout smaller and or weaker competitors. Think contrarian. Other important things I learned were why being very capital specific can make any industry differentalso lot’s of economic terms such as variable cost, fixed cost, and economic depreciation. Additionally seeing how crazy it is to deal with the energy industry.