A cyclical industry is sensitive to the business cycle, such
that revenues generally are higher at the time of economic boom and
are lower in periods of economic distress. In such industries
employee mobility is usually high.
There are ways to predict industry's sensitivity, which are
given as follows -
- If there is uncertainty, the strength of the business cycle
should be tested.
- Understanding the relationship between inputs and outputs of a
system.
- Trying to find out possible errors in a business model.
- Testing the simplicity of a model like if there are any inputs
present which do not contribute to the output positively
- Checking if there is proper communication between those who
work at different levels of the system.
- Finding the scenario where output is maximum with a specific
input and the repetitiveness of occurrence of that scenario.
- Finding out a scenario where observations, model inputs and
forecasts are give best output and also a scenario where least
output is obtained.