...(Print) 2029-4433 (Online) Journal homepage: http://www.tandfonline.com/loi/tbem20 Evaluation of some business macro environment forecasting methods Vulfs Kozlinskis & Kristine Guseva To cite this article: Vulfs Kozlinskis & Kristine Guseva (2006) Evaluation of some business macro environment forecasting methods, Journal of Business Economics and Management, 7:3, 111-117 To link to this article: http://dx.doi.org/10.1080/16111699.2006.9636131 Published online: 14 Oct 2010. Submit your article to this journal Article views: 1769 View related articles Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=tbem20 Download by: [86.20.58.206] Date: 10 November 2015, At: 14:42 Journal of Business Economics and Management 2006, Vol VII, No 3, 111117 ISSN 1611-1699 EVALUATION OF SOME BUSINESS MACRO ENVIRONMENT FORECASTING METHODS Vulfs Kozlinskis1, Kristine Guseva2 Riga International School of Economics and Business Administration (RISEBA), Meza iela 1, k. 2, LV-1048 Riga, Latvia E-mail: 1Vulfs@rsebaa.lv, 2 kris@rsebaa.lv Downloaded by [86.20.58.206] at 14:42 10 November 2015 Received 06 03 2006; accepted 28 04 2006 Abstract. Latest studies in the field of business macro environment (BME) assessment and forecasting have been undertaken and successfully implemented by the World Bank (2003-2004). Considerable contribution to the...
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...Explanation Forecasting is defined as actively predicting a future event or condition, Many forecasting decision or methods or informal such as a gut feeling or intuition, recent experiences, rule of thumb, advice from a friend or friends, or a combination but some use models and math mathematical methods. Since forecasting informal methods can be highly subjective, those utilized by government or business need to be more formal as informal approaches may problematic and untainted. More systematic methods are often employed as business and government forecasting approaches need to be made in the interest of the public, community or business (McCalman, 2012) This topic was chosen for academic as well professional interest as correct and accurate forecasting can serve as great cost saving methods or revenue generator for an organization. Article Review & Comparison McCalman defines forecasting as the prediction of future events comparing both informal and formal methods both in business and government. The most informal method or formalization discussed by McCalman is forecasting based on most recent observation. Systematic forecasting existing at the opposite extreme uses data and mathematical methods used largely or restricted forty years ago to experts with large computing power. As time has progressed the systematic methods not only utilized technology and data but statistical information and statistical software programs, which has opened forecasting up to those...
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...demand that now becomes dependent) requests. Different environments are defined according to different CODP, they are: * The Make-to-stock (MTS) environment has its CODP in the finished goods inventory, it means that the buyer will buy the product directly from the inventory. The focus of the demand management is providing finished goods when and where the customers want them. In order to have assure these customer service (control) said before, the demand management have to plan inventory levels that will supply the demand correctly(planning) using and providing forecast (information). * In the Assemble-to-order (ATO) environment, the CODP is when the consumer decide what already produced components he wants and the company would then assemble them to complete the consumer's order. In order to meet delivery dates (control), the demand management has to determinate these delivery dates (planning). The demand management also has to know if the components can (or can't) be combined in a viable product, it means: see if the combination asked by the client is viable, it is called configuration management(information). * The CODP of a Make-to-Order (MTO) environment is the raw material inventory fabric. The focus of the demand management is coordinating information on customers' product needs with engineering. In the Engineering-to-Order (ETO) the CODP is with the suppliers. The difference between these two environments are the...
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...analysis………………………………………5 2.1 What is sales forecasting……………….……………………………...5 2.2 Importance of forecasting in a new B2C business………….…………5 2.3 What affects sales forecasting?..............................................................6 2.4 Techniques of sales forecasting…………………….…………………7 2.4.1 Judgmental methods……………………………………….7 2.4.2 Counting methods………………………………………….8 2.4.3 Newer methods…………………………………………….8 2.5 Adapting forecasting to the company……………………………………...9 3. Conclusion……………………………………………………………….….9 References…………………………….………………………………………10 LIST OF FIGURES Figure 1: Elements of sales forecasting………………………………………………………………..7 Figure 2: Forecasting techniques used in practice …………………………………………………….8 1. Introduction This report discusses the importance of sales forecasting to the entrepreneurial start-up firm in B2C market. The previous assignment discussed the case study on the new set up business related to food industry. The business idea was to create a website and a mobile application that allows office people to order healthy food by choosing every ingredient to suit their personal taste. The concept is quite new to the market so the management has to look into the future sales by implementing sales forecasting. So, the aim and objectives of this report are as follows: Aim: · To discuss why sales forecasting is important to the entrepreneurial start-up business in B2C Objectives: * To explain the nature of forecasting and the importance of it ...
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...Forecasting is an important aspect in today’s business world. Every day businesses strive or lose, depending on the successfulness and accurateness of their forecasting. For successful forecasting, the forecaster needs to have a clear understanding of the current business activities, past trends, and the company’s business strategy. Case 5 exhibits key principles on the way financial forecasting is done. Understanding the Financial Relationships of the Business Enterprise Forecasters use current information to predict the future business activities of the company. This information is found on the financial statements of the company. For example, the balance sheet provides a snapshot of the business’ assets, liabilities and equity at a specific point in time, whereas the incomes statement provides a view of the flow of costs during a specific time frame. Financial ratios measure the relationships between various items on the financial statements. By comparing various ratios with those of previous years, trends can be identified. Because many financial ratios tend to be perserved over time, these ratios are very valuable for the forcaster. The forecaster can estimate only one financial statement line item and, by applying this number to the various ratios, he can make a complete forecast. Grounding Business Forecasts in the Reality of the Industry and Macroenvironment An accurate forecast is made by recognizing not only internal data, but also external data. The environment...
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...1. What are features common to all forecasts, elements of a good forecast, steps in forecasting, and forecasting accuracy? A: A forecast is a statement about the future value of a variable such as demand. That is, forecasts are predictions about the future. The better those predictions, the more informed decisions can be. Some forecasts are long range, covering several years or more. Long-range forecasts are especially important for decisions that will have long-term consequences for an organization or for a town, city, country, state, or nation.(Stevensons- 11e). In simple terms, forecasting is the predicting future results from the present context using forecasting tools such as statistical analysis, regression analysis, moving average, time series, etc. Larger samples and random statistical analysis would lead to better forecasting than casual or convenience method of data collection resulting in more accurate forecasting of the future trend. FEATURES COMMON TO ALL FORECASTS 1. Forecasting techniques generally assume that the same underlying causal system that existed in the past will continue to exist in the future. 2. Forecasts are not perfect and their results usually differ from predicted values. Allowances should be made for forecast errors. 3. Forecasts for groups of items tend to be more accurate than forecasts for individual items because forecasting errors among items in a group usually have a canceling effect. Opportunities for grouping may arise if parts...
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...employees with the necessary skills at the right time. The increased competitive nature of business that makes workforce flexibility an imperative need has raised the importance of human resource planning. Effective Human Resource planning entitles five main steps. These steps include: 1. Demand Forecasting 2. Supply Forecasting 3. Audit 4. Reconciliation Or Affecting A Demand-Supply Fit 5. Control. Demand Forecasting This is a process of determining future needs for Human Resource in terms of quantity and quality. It is done to meet the future personnel requirements of the organization to achieve the desired level of output. Demand Forecasting requires a good understanding of the internal and external environment of the enterprise. Short-term and long-term organizational plans and strategies are the major aspects of the internal environment that affect HR Planning, while on the other hand, the general status of the economy, developments in technology, level of competition, labor market trends and regulations, demographic trends are the major aspects of an enterprise’s external environment that impacts HR planning. There are two main methods of forecasting. These include: Delphi technique/ managerial estimates, and various mathematical models. * An example of various mathematical models are time series, personnel and productivity ratios,...
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...decision support systems (MDSS) are considered by some businesses a key tool in gaining the edge over competitors. MDSS can be used to assist, rather than supersede, employee decision makers in the complicated scenarios which are common in marketing. Also MDSS can be defined as A coordinated collection of data, systems, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and the environment and turns it into a basis for marketing action An emerging trend in the realm of marketing has been the increased application of marketing decision support system (MDSS) technology to aid with decision-making (DM). Developing a sound and robust marketing strategy has never been an easy task. The success or failure of a company’s marketing effort depends on the interaction of numerous internal and external factors, combined with the knowledge and intuition of the decision-makers themselves. Marketing DM requires a comprehensive analysis of environments both inside and outside the firm. It requires a wide range of strategic information, including hard and soft information, and it requires managers to deal with issues that involve a high degree of uncertainty, subjectivity and ambiguity. Marketing also involves managers’ intuition, judgment, and personal vision. These characteristics of marketing decisions present a real challenge to decision-makers. While managers certainly possess specific strengths and advantages...
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...service and manufacturing operations. Organizations can be divided into manufacturing and service operations, which differ in the tangibility of the product and the degree of customer contact. Manufacturing and service operations have very different operational requirements. 5. Identify major historical developments in operations management. A number of historical milestones have shaped operations management into what it is today. Some of the more significant of these are the Industrial Revolution, scientific management, the human relations movement, management science, and the computer age. 6. Identify current trends in operations management. OM is a highly important function in today’s dynamic business environment. Among the trends that have had a significant impact on business are just-in-time, total quality management, reengineering, flexibility, time-based competition, supply chain management, a global marketplace, and...
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...Forecasting Methods Genius forecasting - This method is based on a combination of intuition, insight, and luck. Psychics and crystal ball readers are the most extreme case of genius forecasting. Their forecasts are based exclusively on intuition. Science fiction writers have sometimes described new technologies with uncanny accuracy. There are many examples where men and women have been remarkable successful at predicting the future. There are also many examples of wrong forecasts. The weakness in genius forecasting is that its impossible to recognize a good forecast until the forecast has come to pass. Some psychic individuals are capable of producing consistently accurate forecasts. Mainstream science generally ignores this fact because the implications are simply to difficult to accept. Our current understanding of reality is not adequate to explain this phenomena. Trend extrapolation - These methods examine trends and cycles in historical data, and then use mathematical techniques to extrapolate to the future. The assumption of all these techniques is that the forces responsible for creating the past, will continue to operate in the future. This is often a valid assumption when forecasting short term horizons, but it falls short when creating medium and long term forecasts. The further out we attempt to forecast, the less certain we become of the forecast. The stability of the environment is the key factor in determining whether trend extrapolation is an appropriate forecasting...
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...FACTORS AFFECTING PLANNING Conditions • Evaluating the present conditions of the business • Change happens unexpectedly Time Factor • Time is the most precious resource of an organization • Managers are given a span of time within which to bring out plans into implementation Resources Available • There must be enough funds and materials available for the purpose of putting plans into effect Skills and attitudes of management • An attitude of indifference and non – involvement could but spell failure to any planning Political, social, and environmental conditions • Social and economic conditions of the community Physical Facilities • Science and technology • Plants and equipments Collection and analysis of data • Information is the greatest resource • Acquisition, organization and interpretation of data POLICIES AND CLASSIFICATIONS Policies are guides to managerial decisions which fall under certain limits or boundaries These are formulated by management to govern actions at all levels As to Origin Imposed policies Are those required by the government as laws, procedures and administrative orders Appealed policies Are formulated when a subordinate endorses to his superior matters not covered by existing policies Originated policies Are those that are formulated by the top management As to level in the Organization Basic policies Formulated at the start of the business but may be amended to cope with changing conditions ...
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...amongst economists around forecasting the demand for and supply of labour. The lack of evidence of its usefulness (Rothwell 1995 cited in Storey 2007), problems with its application and the complexity of predicting the labour market has led many to take the view that forecasting is neither useful nor necessary (Taylor 2010). Forecasting is a key aspect of Human Resource Planning (HRP); which can be a complex process especially during periods of economic uncertainty and fluctuation. This intensifies the pressures between the need for planning and the difficulties of prediction. Nevertheless, the fundamental purpose is simple: HRP is concerned with assessing and meeting an organisation’s current and future workforce needs. This ensures the right number of people with the appropriate skills and competencies are in the right jobs at the right time and at the right cost so as to achieve organisational objectives (Foot and Hook 2005). In presenting a balanced view, this essay will analyse the argument for and against HRP in determining if it is unfeasible for organisations to accurately forecast the demand for and supply of labour. Furthermore, how HRP can inform other Human Resource (HR) activities such as recruitment and selection (R&S), succession planning, performance management and training and development amongst others. Specific reference where appropriate will be demonstrated to showcase links between theoretical and practical context. Forecasting as a key element of HRP ...
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...HR Plan-08s The HR Planning Process I. HR Forecasting: Meaning II. Forecasting Activity Categories III. HR Forecasting Time Horizons IV. Determining Net HR Requirements I. HR Forecasting: Meaning HR forecasting constitutes the heart of the HR planning process. It can be defined as ascertaining the net requirement for personnel by determining the demand for and supply of human resources now and in the future. After determining the demand for and supply of workers, the organization's HR staff develop specific programs to reconcile the differences between the requirement for labour in various employment categories and its availability, both internally and in the organization's environment. Programs in such areas as training and development, career planning, recruitment and selection, managerial appraisal, and so on are all stimulated by means of the HR forecasting process. II. Forecasting Activity Categories Forecasting activity can be subdivided into three categories: • transaction-based forecasting, • event-based forecasting, and • process-based forecasting. # Transaction-based forecasting analyses focus on tracking internal change instituted by the organization's managers. # Event-based forecasting is concerned with change in the external environment. # Process-based forecasting is not focused on a specific internal organizational event but on the flow or sequencing of several work activities (e.g., the warehousing shipping process)...
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...1. Introduction: Leitax is a large digital camera manufacturer and it was the seventh largest player in the field of digital camera business in 2004. It is headquartered in Memphis, Tennesse, U.S.A and made a revenue of $423 million in 2002. Leitax was a subsidiary of Newplex, a $22 Billion print, imaging and a consumer electronics company. Leitax was started owing to the large boom period witnessed in the digital camera market in the early 2000’s. It was to become a company that focused on manufacturing and selling of digital cameras in the different geographical regions of the U.S and in the world namely Europe, Middle East and Africa (EMEA) and the Asia Pacific Region (APAC). Leitax was able to sell its cameras through retailers such as Best Buy, CompUSA and Circuit City in U.S.A , Carrefour in Latin America and other retailers in Europe and Asia. In addition to the respected Directors already employed, Leitax further employed Sales Directors to control operations in the Latin American and Canadian regions. Leitax maintained Distribution Centres (DC’s) in Little Rock & Arkansas in the U.S, Amsterdam-Holland in Europe and Hong Kong- China. Manufacturing was undertaken in the plants located in Mexico, Chile and China and then were shipped to the DC’s for resale to the retailers. Leitax on an average had produced and maintained eight camera models in its product portfolio that offered optical zoom, megapixel resolution and internal memory. These cameras were able to the...
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...planning or sales forecasting is one most important aspect of any organization whether it is a services or a manufacturing organization. A services organization would be estimating the demand for the services and thereby gearing itself up to service the demand for its services. A manufacturing organization would be estimating the demand for its manufactured goods and hence would be working towards whole lot of activities like supply of raw materials, production capacity, distribution etc. Demand planning plays a very strategic role in any organization as the planning for whole lot of other activities depends on the accuracy and validity of this exercise. For example Sales and...
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