1. SS
CYCLE
Rohan Solanki
Nikita Goud
Umar Khan
Nikhat Rajput
Prabhu Hosmani
Afreen Shaikh

2. What is a Business Cycle?
 The term business cycle refers to
the recurrent ups and downs in
the level of economic activity,
which extend over several years.
 Definition: alternating increases
and decreases in the level of
business activity of varying
amplitude and length.

3.  How do we measure “increases and
decreases in business activity?”
 Percent change in real GDP.
 Why do we say “varying amplitude and
length?”
 Some downturns are mild and some are
severe, whereas,
 Some are short (a few months) and
some are long (over a year).
 Do not confuse with seasonal fluctuations!

4. Periods of Business Cycle
 The Short Kitchin Cycle (40 months).
 The Long Jugler Cycle (9 ½ years).
 The Very Long Kondratieff Cycle (50
years).
 Building Cycle (18 years).
 Kuznets Cycle (16-20 years).

5. Business Cycle : Diagram
Expansion Recession Expansion
Peak
Total Output
Secular
growth
trend
Trough
0

6. Characteristics : Peak
Phase
 Real output in the economy
is at a high level.
 Unemployment is low.
 Domestic output may be at
its capacity.
 Inflation may be high.

7. Characteristics : Contraction or
Recession Phase.
 Real output is decreasing.
 Unemployment rate is rising.
 As contraction continues, inflation pressure
fades.
 If the recession is prolonged, price may
decline (deflation).
 The government determinant for a recession
is two consecutive quarters of declining

8. Characteristics : Trough or
Depression Phase
 Lowest point of real GDP.
 Output and unemployment “bottom
out”
 This phase may be short-lived or
prolonged.
 There is no precise decline in output
at which a serious recession
becomes a depression.

9. Characteristics : Expansion or
Recovery Phase
 Real output in the economy is
increasing.
 Unemployment rate is
declining.
 The upswing part of the cycle.

10. Business Cycle : PEPSICo.
India

11. Growth Phase – Boom Phase
 Launched in India in 1988
 Consistent Growth.
 Waves of optimism.
 Highest point of Expansion.
 Rise in profits, investment, sales,
employment etc.

12. Expansion
R ET A IL M A R K ET S H A R E O F B EV ER A G E P R O D U C T S
Sports Drinks
Teas
2%
Bottled W ater 3%
13%
Fruit Drinks
16%
Colas
66%

13. Recession
 Uncertain downfall.
 Controversies.
Outcome- Decline in profits,
sales etc.

14. Revival
 Turning point from depression into
expansion.
 A result of New Innovation.

15. SWOT of PEPSICo.
 S- Strong brand name, corporate
identity,
Global distribution, New innovations.
 W- Health Issues, misleading
advertisements.
 O- Growing demand, Expansion into new
markets, faster growth.
 T- Competition from coke, legislation
health scares like France and Belgium.

16. To conclude…
 As we have seen, a business cycle describes the
phases of growth and decline in an economy.
 The goal of an economic policy is to keep the
economy in a healthy growth rate -- fast enough to
create jobs for everyone who wants one, but slow
enough to avoid inflation.
 Unfortunately, life is not so simple. Many factors can
cause an economy to spin out of control, or settle
into depression.
 The most important, over-riding factor is confidence –
 Of investors, consumers, businesses and politicians.
 The economy grows when there is confidence in the
future and in policymakers, and does the opposite
when confidence drops.
 So a business cycle plays an important role in