Trend Turning
Information from the environment of the company must not only statistically, but must especially facing forward be interpreted to protect against economic fluctuations or even crises, must be interpreted with a view into the future funnel environment information: i.e., companies need a radar-like all-round observation system, which signaled early disturbances. Early warning signs of the market are for example: acceptance of the market due to substitution tendencies, fragmentation of the market, enlargement of the market due to new customers, including globalization, stagnant or shrinking demand of amounts of, declining price elasticity, increased import pressure, worsened export possibilities, falling barriers to entry for newcomers, increasing barriers to exit due to increasing capital intensity, towards the standardisation of products; declining differentiation potential, declining customer loyalty with branded products, more competitors and overcapacity, increase the Price competition, mergers among producers, trade and others, demand concentration, E.g. by purchasing organizations, change the customer structure, elimination of trade levels, ever-smaller market niches are occupied by an increasing number of competitors. CF. Becker, Jorg: marketing controlling and intellectual capital, ISBN 9783837071320. The less time is left scope for countermeasures, the lower, i.e.
it is cheaper aggressively to address the expected change rather than external pressure disturbance events only, nor to be able to respond. The purpose for the use of early warning tools: not only then notice trend turning when these have arisen. CF. Becker, Jorg: Strategy-check and balance of knowledge, ISBN 9783837073058, for example, the interest rate structure as an early indicator of economic development: before an economic recovery, the interest rate structure is usually steep. A slowdown is typically flat or inverted. The interest rate curve which is closely related to the expectations about the future course of monetary policy Central Bank together: If the recovery gained momentum and threatens an increase in the inflation rate, central banks typically operate a restrictive monetary policy. In downturns, however, they ease monetary policy.
Thus, a normal or steep yield curve suggests that market participants anticipate a period of expansion and related restrictive monetary policy of the Central Bank. A flat or inverted yield curve shows vice versa, expect an easing of monetary policy by the Central Bank because of low or negative growth rates in the future. For forecasting purposes, the increase in the yield curve is usually approximated by the difference between the yield of government bonds with a remaining term of ten years and the 3-month money rate. The time delay with which this interest rate differential indicates future expansions and contractions of in economic development determines most of the time with an average of about four quarters.