Write one key takeaway per chapter. Write at least 100 words for each chapter summary.
Explaining Economics allows for you to see general trends in markets that a Executive, CEO, CFO, and marketing guy may overlook. One example of this would be in a bank that sees deposit growth slow down. An executive would look at this decrease and would believe the solution would be to high interest rates. While an economist would be able to examine this problem through a different lens allowing for a more accurate resolution by looking at the overall trends of bank deposits. This would be to wait it out to seee what happens in the future. Business decisions are about the future and must rely on a view of the future this can be done mainly by looking at societal trends and using them to see how society can effect the business world. When there are outlier’s in theses trends that is when economist tend to be wrong but for the most part they are the most accurate at giving you accurate information about the future to make business decisions.
One key takeaway in this chapter is that managers needs to know all the general details of how well there business will be doing throughout the future. This way they will be able to sense a significant drop or rise in employment, sales, and production. Without knowing this information the business is at high risk of being caught off guard during a recession, hurting the business significantly in the future. Although looking out for a recession is very important it is even more important for managers to know about fluctuations in his or her business. These fluctuations happen often and while many times are seen as insignificant many could put people out of business. One example of a scenario where one would need to know about the fluctuations in his or her business is looking at a manager of a real-estate business. Real-estate is a sector in the economy that is very volatile so managers need to be very aware of the state of the economy. Otherwise if a manager begins to see interest rates go up he must know that the amount of houses available will go up. While the amount of people buying houses will go down. Spotting these fluctuations is especially important for housing since it is a leading indicator in the economy, meaning that it moves up or down before the economy does. This means a manager in real estate has very little time compared to other sectors in the economy to react. Even though this may seem like a negative it is important to understand since housing is a leading indicator that many times they will also recover from a downfall before the economy does. As you can see there are many fluctuations that can occur and how they effect your business depends on the sector of the economy you belong too. As a business manager it is important to know your sector and what effects it because if you don’t know, your business will be caught off guard and negatively effected.
One key takeaway in this chapter is that A manager needs to monitor consumer price index, producer price index, and Measures of wage inflation. First a manager should look to the product price index since this is where the inflation or price changes will first be seen. Although PPI is less stable large increases in PPI can show foreshadowing of an increase in your company’s costs.This results in your company being able to read increases of prices due to inflation. Managers should also look at measures of wage inflation since this is the single highest increasing piece of wage inflation. This will determine how much your company’s employee cost will be going up or down.
One key takeaway in this chapter is all Managers are effected by recessions since they will be the ones responsible for preparing the company for the recession. It is important for managers to know the majority of the time the economy will grow. Considering this during times of growth it is important to prepare for a recession with a plan. When creating your companies plan managers need to monitor a company vulnerability to a recession, sketch out a contingency plan for a rec, and build flexibility into day-to-day operations. Overall, A company that learns in its contingency planning that it has limited options for cutting expenses may spend a year adding flexibility wherever it can. This shows how important it is to start planning ahead of time since simple budget cuts may not be enough to keep a company running during a recession. Recessions are part of running a business therefore you can not simply ignore them. If a company chooses to not plan for a recession there options for what they can do will be much more limited and it will take away flexibility from a company.
One key takeaway in this chapter is that Managers are effected by recessions since they will be the ones responsible for preparing the company for the recession. It is important for managers to know the majority of the time the economy will grow. Considering this during times of growth it is important to prepare for a recession with a plan. When creating your companies plan managers need to monitor a company vulnerability to a recession, sketch out a contingency plan for a rec, and build flexibility into day-to-day operations.
One key takeaway in this chapter is that in the world of business you cant always know for sure that a slowdown or growth is about to occur. But to make sure you can be aware as soon as possible of slowdowns you should review the market data on a regular basis to insure you are informed of what is going on and how it will effect you. It is also important to know that this job cannot be done on your own and you will need other opinions on the way. Monitoring your slowdowns overall allows you to act faster to slowdowns and growth and could potentially save your business one day.
One key takeaway in this chapter is that Managers have 4 steps through the business cycles. The first step is where managers assess the company’s vulnerability to a recession. Next a manager must sketch out a contingency plan for dealing with a recession. This will insure your company is prepared ahead of time and knows what to do during downturns. Managers after to make life easier during a recession should build flexibility into the company’s day-to-day operations. Lastly, managers should develop an early warning system for identifying incoming downturns. As you can see being a manager is all about consistently being prepared to change how the company functions based on the economic conditions they are facing at the time.
Overall it’s important to understand that economic downturns can be different than in the US. When your companies are involved with the foreign market there are many more challenges presented. Managers that are involved in the foreign market should diversify international operations. This will add flexibility to your company overseas. Sales oriented companies are easy to sell in a # of countries which makes them less risky. While production oriented companies have offshore facilities in different regions. Overall foreign business is more complicated and requires more planning before and during the time of business to manage potential risk and downturns.One key takeaway in this chapter is that It is important for a manager to be aware that when there company is in a foreign market they must also focus on business cycles in other countries. Most of the the US market and the Foreign markets are very similar. But, examples such as the Asian financial crisis show that it is very important to also be very aware of foreign business cycles and downturns. When dealing with a foreign market it can be especially hard to build in flexibility and at most times can never be reached at the same level as the US.
One key takeaway in this chapter is that Business managers need to know certain regions of the country go up and down differently to the national economy. In order for manager to assess the risk of a regional recession they must focus on the local economy. Managers should focus primarily on production instead of sales to watch for the severity of an incoming recession. Other ways to look for a recession include tracking the local swings and it affects. Managers need to pay attention to this since it can greatly affect a companies local labor rate and real estate market. Managers should first identify key industries for region for there early warning system. Then key industries should be monitored my management to look for downturns. It is important to understand and track theses industries even if you aren’t involved since subsequently if that business goes down in earnings so will your company. This is because the main industry is what most of that region is dependent on. Meaning if they go down everyone goes down with the ship. Personal income is a good method to measure state economies, but it is published with a 3 month time lag. Essentially this makes it more useful for historical research
One key takeaway in this chapter is that Capital Intensive industry’s need to first recognize their industry capital intensity. Determining how long expansion usually average is very important in determining when to make investments. This puts a major importance on knowing how long expansion will be over when a down turn will occur. Capacity should only be added to a company when expansions expected to continue. Companies that invest early in an expansion are better off and those who invest late are at risk of going into bankruptcy. Once companies start to announce expansion plans this is when you should stop adding capacity and collect profits as further investment could set a company up with too much capacity and possibly bankruptcy.Capital intensive business are overall are different from less capital intensive businesses. Capital intensive business is vulnerable to profit killing cycles that are due to overbuilding at the end of expansion. Managers in capital intensive businesses need to know industry level of capital investment and monitor it frequently to avoid having to little or too much capital.