What do we know about cycles? How does this concept relate to our life and what role does it play in our environment? Of course, we all know what it is. But what kind of cycles are there, this is a more interesting question.
What is a cycle?
This is a general concept that has widespread use in various fields of human activity. A cycle is mainly a set of actions.
If you characterize it as a generalized term, then this is the final sequence of functioning of the material and technical components of an object or phenomenon in space and time. This is a kind of circle of certain events that can be repeated with or without periodicity.
To understand in more detail in this concept, it is necessary to consider the main types of cycles. This term is used in various fields of science and technology. For example, it can be found in mathematics, economics, programming, physics, biology, geography, literature, and many others.
What are the cycles
Today we can distinguish the following types:
1. Economic:
- the life cycle of the organization;
- product life cycle;
- production;
- operational;
- financial;
- technological;
2. Historical.
3. The cycle in programming.
4. Mathematical.
5. Thermodynamic.
6. Vital.
7. Menstrual.
8. Demographic.
9. Musical.
10. The cycle of stories.
11. The cycle of the machine.
12. Training.
13. Geographic (solar, lunar, sedimentary cycles).
Consider each of the species in more detail.
What is the business cycle
Most economic indicators are dynamic. They never stand still and change all the time. Among some of them, one can notice the cyclical nature, that is, they are either growing or falling again. These fluctuations are called the economic cycle.
It is worth noting that the economy of any country that has a market type of economy will be cyclical.
Thus, the economic cycle is the repeated fluctuations of various economic indicators, which generally give a specific periodicity and talk about economic activity in a particular period. Sometimes this period is called "business".
The economic cycle can characterize the economy of a single production, city, country or selectively taken regions of the world.
It is quite difficult to predict which way (progress or regression) he will go, since many different factors influence this. Fluctuations are usually irregular.
Stages of the business cycle
There is such a thing as the duration of the cycle in the economy. This term explains the period of time between two identical phases (stages) of economic activity of a subject of the economy.
Four basic stages form a complete cycle.
So, the first stage of the economic cycle will be an upswing. It is characterized by the revitalization of all processes. If we are talking about the national economy, then in this phase the inflation rate is low, the consumer seeks to make purchases that were delayed during the crisis.
The second phase is the peak. In the process of the first phase, rapid growth is observed and the peak characterizes the highest degree of business activity. For the national economy, the peak of economic activity will be a small level of unemployment, the most efficient operation of enterprises, business is growing and increasing its capital through lending. After the peak, a decline immediately follows.
The third phase is recession. This is the stage at which the economy is experiencing a decline in activity, a recession. The volume of production of goods and services is declining, the level of investment is falling. In view of the above factors, the unemployment rate begins to rise, the volume of goods for which there is no demand is growing, prices are falling, which is why household incomes are falling, demand is continuing to decline. A long and protracted period of economic downturn is called depression.
The fourth stage is the bottom. The bottom is the lowest point of economic activity. At this stage, the unemployment rate is the highest, the level of production is small. There is an excess consumption of goods that were produced in previous periods. Prices are no longer falling, and production is gradually starting to increase. This phase is usually fleeting, followed by a rise again. But there is an example in history when the bottom in the economy dragged on for 10 years (The Great Depression in 1929-1939).
Types of Economic Cycles
In the scientific literature there is an approved classification in accordance with their duration and frequency. In general, it is worth noting that the types of economic cycles total more than 1380 units.
Consider the most popular classification:
- Short-term cycles of Joseph Kitchin. Duration - from 2 to 4 years. The scientist explained this by the fact that world gold reserves are constantly changing. This was true in the 20s of the 20th century. Today, scientists explain this short duration of the economic cycle by the presence of temporary delays (lags) in the production of the data necessary for commercial activities. As an example, saturation of the market with a certain product can be given. Production receives this information late, which is why there is an overproduction of the goods and its surplus is formed in warehouses.
- The medium-term cycle of Clement Juglar. The duration of the cycle is from 7 to 10 years. The French economist opened these cycles. The increase in the duration of the cycle is explained not only by time lags with production information, but also by delays in investment decisions. As the load level of the enterprise and the volume of goods fluctuate, Juglar supplemented the theory also by the fact that the volume of investments in the fixed assets of the enterprise also fluctuates, which, accordingly, increases the lag period.
- Simon Smith's cycle (rhythms). The American economist, Nobel laureate, opened these cycles in 1930. According to his life cycle model, the duration of the period is 15-20 years. The explanation of the duration of the cycle lay in the influence of demographic processes (a constant influx of immigrants), as well as in changes in the construction industry. In view of this, the Kuznets rhythms are also commonly called “demographic” or “building” cycles. Today, Kuznets cycles are considered more as “technological”, as they are directly related to continuous innovation in the technological field.
- Long cycles of Nikolai Kondratiev (from 40 to 60 years). They were also opened in the 20s of the 20th century. They are called K-waves, or K-cycles. They are associated with such important inventions as steam engine, railway, electricity, internal combustion engine, computer technology and much more. Serious changes in the structure of production of goods can also influence the cycle period.
You can also distinguish even such longer types of cycles, such as:
- Forrester cycle. The duration of this period is 200 years and is explained by the fact that materials and energy sources change in production.
- Toffler cycle. According to this model of the life cycle, the duration of the period is 1-2 thousand years. The scientist explains such a cycle by the constant development of civilization and the introduction of new developments by scientists both in theory and in practice.
Organization life cycle
What describes this term? This is a complex of certain phases of enterprise development during its existence.
The main stages of the organization’s life cycle are:
- Becoming. At this phase, the product’s life cycle is formed (more on that later), the organization’s goals, the search for partners and preparation of ideas for implementation, the recruitment of specially trained personnel, as well as the release of the first trial batch of goods. At this stage, the leader forms a strategy for the enterprise - power (large capacity), adaptive (individual consumer needs) or niche (advantage over other enterprises in a certain area of production of goods and services). The duration of the production cycle is calculated.
- The second stage is growth. At this stage, the enterprise is developing, management is being improved, the staff is increasing, various systems of incentives and standardization of work are being introduced in order to increase labor and production efficiency. An analysis of the organization’s relationship with the external environment, coordination of its goals and priorities is also carried out here.
- Maturity. At this stage of the organization’s life cycle, the company's growth is stabilized. During this period, the company reaches a market leader position, continues to expand its assortment, and improves the organization structure. If a company has reached the maturity stage, it means that it is able to maintain a stable position in the market and is able to set an example for more “young” organizations.
- The last stage in the life cycle is decline. At this stage, there is a drop in demand for products, a decrease in profits. Stronger competitors appear on the market, or the need for manufactured products simply disappears. The knowledge and experience gained over the years of the company’s existence can no longer be correctly integrated into the system of representations of the company. Why is the experience now obtained is not fixed.
Product life cycle
This, in turn, is the duration of demand for one or another product in the market. This is marketing research, which is mainly aimed at the consumer market. The basis of this is an understanding of the essence of the life cycle - everything has its own life on the market, and sooner or later a new, more advanced or cheaper one comes to replace one product.
As in the case of organizations, there is such a thing as the stages of the product life cycle. There are four of them:
- Stage of implementation. At this stage, the company develops a market for a new product, considers future demand for a particular product. As a rule, at this time, there is a small increase in sales, possible losses. The cost of marketing research is minimal, the level of competition is quite limited.
- Stage of growth. At this phase, one can observe a rapid increase in demand for products. Sales volumes and revenues of the manufacturer are increasing. If demand begins to fall, the goods accumulate in warehouses, as they are filled, the price of this goods begins to fall in order to sell it as soon as possible.
- Stage of maturity and saturation. Most of those who want to buy a product have already done this, so the growth in demand is not so rapid, interest in the product disappears. As a result, the demand level peaks and falls, settling at a specific point.
- Stage of decline. When the market there is a steady drop in demand, income from sales of goods and the volume of its sales, then the organization is at the stage of the product life cycle "decline". In this case, firms are offered four options for overcoming the situation: improving the marketing program, updating the design of a product, changing its position on the market, or canceling the production of a particular product.
The production cycle
This is a set of actions with tangible current assets (mobile assets of an enterprise are assets in which money is invested and which can be converted back into cash during the cycle). That is, the production cycle is the time interval between the procurement of materials for production until the finished goods are released.
The duration of the production cycle at each enterprise is different. It all depends on the complexity of the manufacturing process, the supply of materials, equipment and much more.
In order to calculate the cycle, you need the following data:
- the duration of the technological cycle;
- total break time (both for organizational and technical reasons, and a break according to the schedule of the company);
- time of natural processes.
Moreover, the duration of the technological period is the time during which a person directly or indirectly acts on objects of labor (materials for the manufacture of goods). That is, for the direct manufacture of products (the manufacturing technological cycle). It is also important to consider only those time costs that do not go in parallel with the technological cycle. Thus, adding up all the above time periods, we get the duration of the production cycle.
Operation cycle
This is a broader concept, because, in addition to the production cycle, it also includes the time of payment for the finished goods. If the company works on a prepaid basis, then the end of the operating cycle will be the time of shipment of the goods, rather than payment.
Of course, the duration of the operating cycle will also be longer in time than the production cycle. It is worth noting that the shorter the cycles in the organization, the more risky its activities will be, and the degree of provision with circulating assets is lower. Moreover, if the cycles are too long, the more expensive the company will be due to the constant need for additional sources of financing.
Calculate the cycle of operations of the enterprise is easy. It is enough to know the following parameters:
- the duration of the production cycle;
- maturities of receivables (DZ);
The sum of the period of the production cycle and the maturity date of subsidiaries and will be the duration of the operating cycle of the enterprise.
In order to calculate the maturity of receivables, it is necessary to divide its volume - without the advances paid - into revenue (net). The resulting amount must be multiplied by 365 days.
Other types of cycles
Life is a sequence of stages of development through which each type of living organism passes in the process of ontogenesis.
The historical cycle is a certain circle of historical sciences studying the events of the past; some historians believe that everything is cyclical, just as in history one can trace the presence of a certain cyclical nature of events.
A programming cycle is a certain sequence of repeated actions. This is part of the code of a specific program that performs the task. For example, for a written program to count from 1 to 1000, it is necessary for it to write a cycle that it will repeat.
Mathematical is a closed route along the vertices of a graph (a set of vertices and lines that are connected together in whole or in part), which is essentially a chain.
A thermodynamic cycle is a sequence of thermodynamic processes that results in the conversion of heat into work (Carnot cycle).
Menstrual is a period of time when changes in the female reproductive system occur and preparation for a possible pregnancy. Repeats at intervals of a month.
The demographic cycle is the process of reproduction of labor resources (from an economic point of view).
Musical is a collection of independent works united by one idea. For example, the cycle "Seasons", which is described immediately by three composers - Antonio Vivaldi, Pyotr Ilyich Tchaikovsky and Astor Piazzolla.
The cycle of stories is also a collection of works united by one idea. Also called a "literary" cycle.
A machine cycle is a period of time through which a machine repeats the same operation, including the time of auxiliary operations.
The lunar cycle is the period during which the moon goes through all its phases and returns to the initial “new moon” phase.