BUSINESS FORECASTING


Business forecasting is the method of estimating future business conditions by analyzing past business knowledge. It is used to predict sales; customer or market size, stability and makeup; employee and salary information; website traffic; inventory; and risk. Business prediction is a very important tool for management, because it provides the premise for several business choices. All businesses use forecasting to some extent, whether to anticipate the needs of their customers, determine whether to launch a new product line or control inventories and supply chains. Budgets and production plans are simple forms of forecasting that have always been used by businesses. Forecasting based on systematic procedures is increasingly becoming an important function within major corporations and even small businesses. The number of companies that have hired forecasters rose substantially beginning at the end of the 20th century.
Forecasting is particularly important for businesses with long production cycles. The longer it takes to supply raw materials, prepare them for production, manufacture the product, market and sell them, the a lot of the general economy will amendment. Fluctuations in price, consumer attitude and the availability of raw materials can impact these enterprises significantly. Forecasting helps to protect businesses against loss by predicting such fluctuations and anticipating how to respond to them in advance.

Business forecasting is not an exact science. Forecasters can reach the same conclusions using different data and different methods, and many times forecasts prove accurate for reasons other than those on which the forecasts were based. Business success or failure is often affected not just by economic trends, but also by human behavior, which is considered very difficult to predict.

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