Final answer:
Business cycles consist of expansions and contractions in the economy, reflecting periods of growth and slowdown. Understanding these cycles helps predict future performance, as companies may recover post-recession or fail to do so. Historical patterns since 1900 show significant economic fluctuations, including the severe 2007-2009 recession.
Step-by-step explanation:
When researching the business cycle of a well-known company, we can take examples from various industries such as retail, technology, automotive, or healthcare. A recession, as defined by the National Bureau of Economic Research (NBER), marks a contraction phase of the business cycle that lasts from peak to trough, followed by a recovery phase from trough to peak. The importance of understanding a business cycle lies in its reflection of macroeconomic expansions and contractions that occur around a long-term growth trend, involving periods of economic growth and slowdown.
Historically, since 1900, the U.S. economy has experienced patterns of recessions and expansions, with the longest three expansions occurring since 1960. Notably, the recession that started in December 2007 and formally ended in June 2009 was the most severe since the Great Depression of the 1930s. Observing business cycles allows economists and businesses to predict future economic performance and strategize accordingly. For example, a company that can recover after a trough phase demonstrates resilience, whereas a company that fails to recover from a recession may face considerable challenges or even go out of business.