Muhammad Israq/Manajemen

I choose topic A. Understanding Business Cycle really helps business people to operate his business
successfully. Do you agree or disagree to the statement?

Yes I agree, in my opinion when running a business, understanding business cycles is essential to
success. Sometimes referred to as a trade or economic cycle, a business cycle is the measured expansion
and contraction of economic growth within a period. With a clear understanding of business cycles,
business owners can make informed decisions. Note that business cycles are relevant on both a micro
level and macro level, so your company experiences them along with the larger economy in which your
business operates. (Opening Paragraph)

Understanding business cycles allows owners to make informed business decisions. By keeping a finger
on the economy’s pulse and paying attention to current economic projections, they can speculate when
to prepare for a contraction and take advantage of the expansion. Knowing how to read whether the
economy is in expansion or hitting its peak can set the stage for how a business withstands the
contraction. Suppose experts speculate an incoming contraction or even recession. In that case, Forbes
suggests that businesses can safeguard their assets by diversifying revenue, reducing expenses, creating
and feeding an emergency fund, keeping inventory low and managing debt. By taking the proper
measures in anticipation of a downturn, you are increasing your business’s longevity. In the case of a
recession, it may be your only shot at survival.

It’s also important to understand how business cycles affect various sectors of the economy, which is
relevant for making investment decisions for both personal and business matters. Wall Strategies notes
that technology, consumer discretionary and financial stocks are sensitive to the business cycles. For
example, technology stocks do well during expansion but decline quickly during contraction.

So, the conclusion is very important to understanding Business Cycle, because Business cycle phases are
determined by considering gross domestic product (GDP), interest rates, total employment levels and
consumer spending. Business cycle phases do not occur at regular intervals; however, they possess
clear indicators. As a business owner, it’s important to understand these indicators and how you need
to react to them. (Closing Paragraph)