Open Access
Article
SciPap-1565
Sensitivity of Economic Branches to Changes in Production Volumes
1 School of Business, University of Chemistry and Technology Prague, Technická 5, Praha 16628, Czechia
2 School of Business, University of Chemistry and Technology Prague, Technická 5, Praha 16628, Czechia
3 School of Business, University of Chemistry and Technology Prague, Technická 5, Praha 16628, Czechia
* Authors to whom correspondence should be addressed.
Abstract: The paper aim is to verify industry sensitivity to changes in production volumes (sales). Sensitivity confirmation is not based on the data describing economic downturn but on permanent internal industry factors. Internal factors take into consideration cost dependency on changes in output quantity produced. Ex ante analysis would discover why some industries would be more vulnerable than the others when significant economic disruption occurs. It has a serious impact on industry performance and business competitiveness position. The examined sensitivity will be expressed by the indicator degree of operating leverage (DOL). The verified assumption should classify neutral industries as sectors with low sensitivity and cyclical branches as industries with high sensitivity. The research is based on the data of more than 1,000 enterprises belonging to four industry sectors. Cyclical industries are represented by CZ-NACE 29 Manufacture of motor vehicles, trailers and semi-trailers and CZ-NACE H Transportation and Storage. Neutral sectors are symbolized by CZ-NACE 10 Manufacture of food products, CZ-NACE 20 Manufacture of chemicals and chemical products. Research conclusions are not demonstrable because initial assumptions were not confirmed and significant differences between cyclical and neutral industry branches were not unexpectedly detected using DOL. It demonstrates that examined issue is more complex and the monitored economic environment does not stay stable even during a period of macroeconomic stability.
Keywords: Czech Republic, Degree Of Operational Leverage, Changes In Sales, Impact On Profitability, Cz-Nace
JEL classification: D24 - Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity, M21 - Business Economics, P42 - Productive Enterprises • Factor and Product Markets • Prices • Population
Received: 14 June 2022 / Revised: 18 November 2022 / Accepted: 19 November 2022 / Published: 22 November 2022
