In the previous article, we interacted with the four stages of the business cycle. Before we started the discussion, we defined the cycle itself saying it is “economy-wide fluctuations in production, trade, and general economic activity.” As I tried to figure out if the business cycle itself exists in types, I failed to obtain material that spoke in that direction. But you know how I do not leave any stone unturned.
I took a look deeper into the definition of the business cycle and got really interested in the fact that the phenomenon has 3 names. Guess what? These have given me the zeal to develop them into an analysis that shows their types together with The 4 Ps of Marketing. Since we already have one of the names, the other two are “economic cycle” and “boom-bust cycle.”
Types of The Business Cycle
Sure these can actually be types especially given they are of effect in different setups. This difference gives us the permission to group the cycle into types. They are based on the setting in which they are being implemented. Let us try and add flesh to these Types of business cycle PDF:
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- Business Cycle
Of course, of the three types of the cycle we have decided to create, the first has to be a Business cycle. As the name implies, this cycle is a variation that has an effect on the corporate world. All businesses, big and small, go through the processes of expansion, peak, contraction, and trough.
In this setting, it is easier to monitor and manage the expansion and contraction phases as the cycle repeats itself over and over again. In business, decisions are made by a minority. They obviously have the interests of the company at heart because they are the owners. This makes it easy to decide what course of action is to be followed in any phase of the cycle.
- Economic Cycle
I would say this version of the cycle is larger in scale as compared to the first type. This cycle affects the entire nation and all other nations that have multilateral agreements with this country. The way four stages of the economic cycle affect economies differ from nation to nation simply because of their differences in systems of governance.
Here it is much more difficult to control what happens during the expansion and contraction phases. Officials tend to be careless during expansion and a lot of looting takes place within and outside government. In Africa, we have witnessed rapid movements from expansion to contraction because of these corrupt tendencies.
Another factor to consider is the fact that politicians are grouped into political parties. These bodies have different sets of ideology that covers political, social, and economic ideas that they are always longing to implement when they get into power. This means the cycle can be distorted for better or worse.
The worst part about corruption is the fact that when it starts from the top, it cascades down to the last member of the household. We see children nowadays who will not do any task you give them if you do not offer a dollar or any amount.
This is another version of the economic cycle. The difference is that it applies more in capitalist societies. boom simply refers to expansion. It is a term derived from capitalist economies and during a booming growth as explained expansion is realized. The subsequent is the bust which is contraction as we know it.
The four stages of these cycles remain unchanged but the atmosphere is always different in each setting. Here is a recap on these.
This is when business growth is realized at visible intervals. This upward trend in the business cycle is responsible for factors like employment increase, economic growth, and upward pressure on prices. The upward pressure on prices is a result of an increase in production and employment, which subsequently results in an increase in the incomes and spending of households and businesses.
At this point, business owners and the decision-makers in economies should put to good use the excess produce and revenue obtained during this stage of the cycle. It has been established enough times that businesses reach their peak and contraction follows. In any setting, government or corporate world, contraction is the most excruciating phase in the cycle. The only way it can be endured better is through a well-managed reserve of spoils from the expansion phase.
Illustrations through diagrams will draw a vivid picture of how your business performances resonate with the four stages of the business cycle, especially when seeking to define the peak. This is the highest point between the end of growth in a business or economy which is usually called expansion, and the beginning of contraction or the decline. The peak is characterized by maximum production by the economy or business, allowable output, adequate employment distribution, and inflationary pressures on prices.
This begins when a business reaches a peak where it can not grow beyond what it is. Here, the business or economy begins to dwindle and this is the definition of contraction as a stage in the business cycle. There is a great reduction in the speed of growth and production. As a result of these challenges employment declines, and pricing pressures step aside.
A trough is the opposite of a peak meaning it is the lowest point a business or economy can ever reach. This is the point at which the dwindling stops and the slowing stop here. A new cycle begins, where expansion is realized once again.
These researches show there is more work for the brain in the business world. While concepts have been developed, little work is being done to either develop them, critique work or come up with alternatives that can suit today’s world.
Technology is rapidly changing our lives and the way in which we conduct business. This means businesses should stop being rigid and move from conventional practices that are irrelevant to the digital era. It is better to deal with new problems during contraction than those who face unaddressed old woes.
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