BUSINESS FORECASTING

Business Forecasting



Business Forecasting

Business forecasting is the method of studying chronicled presentation for the purpose of utilising the information profited to task future business situation so that decisions can be made today that will help in the accomplishment of established goals. Forecasting performances a vital function in today's unsure global marketplace. Forecasting is conventionally either qualitative or quantitative, with each offering exact benefits and disadvantages. In addition, a business forecast is a prediction based on past performance and an analysis of expected market conditions. The great value in making a forecast is that it forces a company to look at the future in an objective manner. In taking note of the past it stays aware of the present and thoroughly analyzes that information to see into the future. It furthermore helps to better supervise enterprise and to set very sensible objectives.

Qualitative and Quantitative Forecasting Techniques

Forecasting can be classified into qualitative and quantitative. Qualitative methods are subjective or judgmental and are based on approximates and opinions. The Delphi method, a widespread pattern of qualitative forecasting, allows professionals to conceive an productive forecast under conditions of extreme uncertainty. Time's series forecasting, a quantitative technique, and uses a statistical analysis of past sales in order to effectively predict future outcomes, but can be limited under conditions of uncertainty (Chase, 2003, p.364).

Business forecasting can be used in a wide variety of contexts, and by a wide variety of businesses. For example, effective forecasting can determine sales based on attendance at a trade show, or the customer demand for products and services (Business and Economic Forecasting, p.1). One of the most significant assumptions of business forecasters is that the past actions as an significant direct for the future. It is important to note that forecasters must consider a number of new information, including rapidly changing economic conditions and globalization, when creating business forecasts based on past sales. Globalization and economic slowdown has made businesses subject to a great deal of uncertainty. In this time of rapid change, economies worldwide change rapidly, new markets open up and old ones change, and demand for products is often uncertain. As such, businesses should be flexible and adaptable in the kinds of methods that they use to outlook future sales (Chase, 2003, p.472).

In an ever-changing global marketplace, organizations are constantly coming up against unusual and novel situations. It is in these situations that modern methods of business forecasting can be especially useful. Modern forecasting methods are usually grouped into two main categories: qualitative methods, and quantitative methods. Qualitative analysis includes the intuitive and knowledge-based approach as discussed earlier. The decision maker reviews all of the information available, and then makes an estimated forecast. Quantitative techniques are used mostly when qualitative information is not available. In contrast, qualitative techniques are based on an analysis of data (Namvar, 2000, p.8).

Delphi Forecasting Method

Qualitative forecasting techniques are: executive committee, the Delphi method, and surveys of the sales force, surveys of customers, historical analogy, and market ...