Economic Cycle and Firm Managerial Strategies

Over time many economists have focused on the problems of economic cycles and crises. Economic cycles are generally the result of global demand displacement, its decrease bringing about reduction of production as well whereas its increase leads to production growth. Starting from the fact that the variations of global demand are the basis of the comprehension of economic cycles, in the literature two categories of theories have been approached(known under the name of external theories and internal theories) which might explain the cyclic evolution of economy. For external theories, the cause of economic cycle is given by the exterior fluctuations of the economic system such as: wars, rates of rise of population and emigration, scientific discoveries and technological innovations. Internal theories refer to mechanisms within the economic system which generates economic cycles and which determines the cyclic movement. According to these theories the whole expansion leads to recession and shrinkage, and the whole shrinkage leads at its turn to expansion similar to a process which recommences regularly.