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This is an MIT Sloan Management Review article. In his 2004 MIT Sloan Management Review article "Principles of the Master Cyclist,"the author made the case for why companies need to learn how to integrate strategic business-cycle management into their tool kits. The article presented a set of principles that savvy managers can use in making tactical decisions (in areas such as inventory management, marketing and pricing) and strategic decisions (in areas such as capital expansion and mergers and acquisitions). At the time of publication, there was a growing perception that the business cycle had largely been "tamed" by the sophisticated application of discretionary fiscal and monetary policies. However, that myth has since been completely shattered--not just by the 2008-2009 recession but also by the U.S. Federal Reserve System's role in formulating the economic policies that helped trigger the crash. In this current article, the author discusses the heightened importance of economic and financial market literacy and how smart forecasting can help companies manage the business cycle more effectively than their competitors. The author highlights three major activities managers need to focus on: (1) developing and deploying forecasting capabilities to anticipate movements and key turning points in the business cycle, (2) applying well-timed business-cycle management strategies and tactics across the functional areas of the organization in a synergistic and integrative fashion, and (3) building an organization with a business cycle orientation, a facilitative structure and a supportive culture.

To manage the business cycle to gain competitive advantage over rivals, firms must develop a "business cycle orientation." Such an orientation must include five important capabilities: the "business cycle literacy" of the top management team; the skillful deployment of various forecasting tools; an organizational structure that facilitates the timely acquisition, processing, and dissemination of macroeconomic information; application of a set of business cycle-sensitive management principles; and an organizational culture that supports business cycle-sensitive management activities. Successfully managing the business cycle does not necessarily depend on the ability to forecast its movements accurately. Rather, all that is required in many cases is for a firm to strategically or tactically respond more swiftly than its rivals.

Business schools fall short on teaching ethics and leadership, says economics professor Peter Navarro.

Understand how your industry relates to overall stock-market cycles, and you'll have a powerful tool for shaping strategy.

The California electricity market is a mess, no doubt about it. But these five lessons may help executives shield their companies from the kind of power shortages that California businesses are suffering.

The electric utility market is in upheavel. Deregulation and a wave of megamergers are sweeping the industry. With states proceeding in piecemeal fashion however, it is unclear what final form deregulation will take. In his article, Peter Navarro, an expert on utility regulation at the University of California, Irvine, argues that removing most regulation and opening up the electricity market to free competition would improve U.S. competitiveness. He contends that the state-by-state approach to deregulation will create more turmoil than a rapid, federally coordinated restructuring.