Business Cycle Basics
The four main phases of the business cycle
What are recession, recovery, expansion, and slowdown?
This marketing strategy involves increasing ad spending during a downturn
What is countercyclical marketing?
This airline used fuel price hedging to gain a competitive edge during volatile times.
What is Southwest Airlines?
This kind of structure enables a company to rapidly act on economic forecasts
What is a facilitative organizational structure?
In The Wolf of Wall Street, Jordan Belfort's business cycle strategy can best be described as:
A) Countercyclical
B) Insane
C) Textbook Navarro
What is B) Insane?
This term describes a firm's ability to anticipate and respond to macroeconomic changes for competitive advantage
What is business cycle orientation?
During this business cycle phase firms should consider acquiring struggling competitors
What is during a recession (or slowdown)?
This cement company used the 1997–98 Asian financial crisis to expand into new markets.
What is CEMEX?
True or False: Forecasting the business cycle is a settled science with no controversy.
What is false?
Back to the Future teaches us that timing is everything. Navarro would say this is key to managing this
What is the business cycle?
True or False: All firms are equally capable of navigating the business cycle.
What is false?
This term describes hiring during a downturn to capture top talent
What is countercyclical hiring?
During the 2001 recession, Intel did this to position itself better for the recovery
What is ramped up capital spending/invested in innovation?
This corporate theory emphasizes the firm’s unique internal capabilities as a source of advantage
What is the resource-based view (RBV)?
An example of this macroeconomic mistake is when in Jurassic Park, they invested big during an economic expansion... only to be eaten alive
What is overexpansion during a boom / ignoring risk forecasting?
Name two components that improve business cycle literacy in a company’s leadership.
What are macroeconomic education, training programs, developmental experiences, and natural aptitude?
Name one functional area included in the Master Cyclist Management Wheel.
What is marketing / HR / risk management / capital expenditures / acquisitions, etc.?
An example of this kind of HR strategy is when Progressive Insurance recruited heavily during a downturn
What is countercyclical hiring?
These are two ways a company can hedge macroeconomic risk
What are geographical diversification, business unit diversification, and financial derivatives?
This Friends character would be most likely to sell off assets at the bottom of the market ("PIVOT")
Who is Ross? ("Pivot!")
This management framework was developed to explain how some firms outperform others during economic cycles.
What is the Master Cyclist Management Framework?
This strategy involves making capital investments when competitors are pulling back
What is countercyclical capital expenditure?
This pharmaceutical firm used a downturn to secure financing and expand R&D while others were retreating
What is Isis Pharmaceuticals?
Name one company that builds a strong business cycle - ready culture by preparing for the worst.
What is PACCAR or Nucor?
In The Big Short, the characters profit from forecasting this major macroeconomic event
What is the 2008 housing market crash / financial crisis?