Download - Business Forecasting
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Business Forecasting
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Business Forecasting
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Business Forecasting
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Business Forecasting
• Used to try to predict the future• Uses two main methods:• Qualitative – seeking opinions on which to
base decision making– Consumer panels, focus groups, etc
• Quantitative – using statistical data to help inform decision making– Identifying trends– Moving averages – seasonal, cyclical, random– Extrapolation - simple
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Business Forecasting
• Some businesses use alternative methods:
• Astrologers!• Is such a strategy any better or
worse than using quantitative or qualitative methods?
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Business Forecasting
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Business Forecasting
• Costs and Benefits of Forecasting:• Benefits:
– Aids decision making– Informs planning and resource
allocation decisions– If data is of high quality, can be
accurate
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Business Forecasting
• Costs:– Data not always reliable or accurate– Data may be out of date– The past is not always a guide to the future– Qualitative data may be influenced by peer
pressure– Difficulty of coping with changes to external
factors out of the business’s control – e.g. economic policy, political developments (9/11?), natural disasters – hurricanes, earthquakes, etc.