Question

Imagine being part of the board of directors of X company, which is dedicated to selling products such as (food) of high need and answer the following question: What determinations should the company take for each of the economic cycles in which x country is (hypothetical)? based on consumption and investment.

Answer 1

ANSWER :Economic Cycle go with phase of Boom when economy is in expansion or growing period and phase of Slump when economy is in contraction or recession period.

A business cycle go through 4 phases-growth,recession,recovery,decline.Business always face this cycle,if there is booming phase form some businesses then there will be phase of slump will also come,because consumption and investment changes,supply and demand changes and many more parameters play their role.

Now coming to the question being part of board of directors of company,which is involved in selling of products of high need like food,health or education etc.

Determinations which company should take for each economic cycle, based on consumption and investments are to be:

1.During the phase of growth company should determined to invest in Research and development and more technical advancement and develop such processes which will maintain sustainability in business without compromising with product.This investment will later help in dealing the situation of recessions and will help in recovery.It should also strengthen confidence of its shareholder by providing them with devided at this time.

2.Dusing the phase recession company should focus on maintaining its balance sheets and utilise resources and new ideas that it developed through R&D.This time investment will be critical hence shareholder's confidence in the company is must to maintain,and credibility of company should not decrease on production.

3.During recovery phase it should focus on investment,advertisements,image renovation and establishing products quality over quantity.Profit in this phase will take back seat with respect to investment.

4.During the phase of decline more rational approach towards utilising monetary resources is needed.phase of decline come when there is not much consumption present in market hence investment in production of Output will also be low but not to extent where it creates shortage in market.