Companies that carefully monitor the economy can prosper in all phases of the business cycle, a relentless alternation of economic expansions and recessions. Best-selling author and scholar Peter Navarro champions a do-it-yourself approach to forecasting. He says that instead of relying on outside experts, firms should produce their own economic forecasts to ensure optimal decision making in both the upturns and downturns of the business cycle. Navarro provides multiple examples of economic indicators that require no formal education in economics to understand. His book also includes case studies of companies that embraced macroeconomic analysis and of others that ignored the potential of tracking the broad economy. getAbstract recommends this book to any manager who wants to use economic forecasts to make better business decisions.
Bracing for the Business Cycle
Ups and downs in the economy are inevitable, so companies that prepare only for opportunity may succumb to adversity. Neither the high points nor the low points of the business cycle are permanent. Expect an endless series of economic growth spurts, slowdowns and recoveries. Knowing how to manage your business in all types of economic conditions is vital for long-term profitability.
Companies tend to respond to economic conditions either proactively or reactively. Proactive firms prioritize economic forecasting, prepare for profound changes in business conditions and, thus, perform well in any type of economy. Reactionary companies pay little heed to economic forecasts, focus almost exclusively on their customers and competitors, and operate mainly in response to current business situations. They do not perform consistently.
Learning to manage the impact of the business cycle strategically yields both defensive and offensive rewards. Companies that respond to broad economic trends in a timely fashion not only brace themselves for business slumps, they also position themselves to acquire assets inexpensively, recruit displaced talent...
Peter Navarro is a professor at the Merage School of Business, University of California-Irvine, and the author of several books, including The Well-Timed Strategy and two bestsellers, The Coming China Wars and If It’s Raining in Brazil, Buy Starbucks.
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