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business cycles and the entrepreneur (the nature of the business cycle…
business cycles and the entrepreneur
the nature of the business cycle
recovery
v sharpe( fast recovery) u shape and L shape (slow)
starts to show positive real gdp growth
peak
high real gdp growth rates, sustained positive employment
contractions
negative real gdp growth
low demand for goods, high job loss, rising unemployment, low levels of consumer and business confidence
slump
when real gdp and employment grow rates decline
consumer and business conformance levels start to decline
definitions
recession * (decline in GDP for more than two consecutive quarters
depression
a recession that lasts longer
ensuring profitability during the different phases of the business cycle
the relevance of the business cycles to the entrepreneur
a failure to base business decisions on the business cycles can often have disastrous consequences foe the entrepreneurs.
industry turnover trends across different enterprise sizes
incorporating business cycle forecasts into business plans
business cycle forecasts are freely available from a large number of institutions
entrepreneurs use such information to
to anticipate changes n demand and supply
to realign capital overheads
to make inventory decisions
to decde on the welfare of human resources
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