Page 2: The business cycle
A business cycle is something that occurs over time in all economies across the world. A sequence of events, both positive and negative economic activity, takes place during the cycle. These stages of the cycle keep repeating over time and over a number of years. The business cycle consists of the following periods; boom, downturn, recession and recovery.
Gross Domestic Product (GDP) is the value of goods and services produced in an economy over a given period of time. Within the UK economy, the level of economic activity constantly changes. When times are good UK organisations in both the public and private sector create more goods and services. This is known as a boom. This period does not last forever. It will reach a peak and then there is a downturn. This downturn, if it continues, will become a recession. As the recession reaches a trough, organisations are producing fewer goods and services. Then a recovery takes place as the economy lifts itself out of the recession.
Changes in economic activity
It is sometimes difficult to predict these changes in economic activity. For example, it is not easy to identify when booming economic activity is reaching a peak. Nor is it possible to predict the depth of a recession. Organisations respond to the waves of a business cycle in different ways, for example, by increasing or reducing output and staffing. This cycle and its activities, as well as the actions governments take during the cycle, has a significant impact on members of UNISON.
UNISON has a key role in understanding, managing and anticipating the impact of the business cycle upon its members. Although There for You is a registered charity, it has to demonstrate a return on investment (ROI). For this reason, it has to react to changes in the business cycle by developing plans and strategies in the same way that a commercial business would do. The services that it offers through the different phases of the cycle need to reflect the needs of UNISON members. This involves constantly reviewing its investment strategy to ensure that financial targets are delivered.