Business Forecasting: Major Problems In Forecasting A Product Demand (Essay Sample)
Discuss the role of business forecasting. What do you think would be the major problems in forecasting a product’s demand? Use an example to support your argument.
Discuss the pros and cons (advantages and disadvantages) of outsourcing for US companies.
Reference: managerial economics in a global economy, 8/e, dominick salvatorre.
1 Business forecasting
1 Role of Business forecasting
Each business has its own objectives and requires planning, decision making, and execution to achieve the objective. Planning requires understanding the future impact of decisions taken today. It is important to recognize the emerging trends in the business environment and predict the future trends to understand the market potential. Accurate forecasting to understand the customer behavior and resulting demand and supply can ensure strong financial health for the business, which is the most important objective for any management (Firth, 1975).
2 Major problems in forecasting a product demand
Estimating the future is difficult and forecasts are known to be wrong most of the time, if not every time. In an ideal scenario, all the factors influencing product demand should be recognized, but that is far from the reality. Ex- In the e-commerce industry, companies are working on innovating marketing strategies and improving the CRM (Customer Relationship Management) to achieve competitive advantage, but they are unable to do so. An e-commerce company faces challenges which run beyond the challenges faced by the retailers. An e-commerce company has to forecast its demand based on the customer's buying behavior which is influenced by the demography of its customer base, new trends, lack of data for new trends, changes in social norms and historic and futuristic performance of its competitors. Even for e-commerce giants like Amazon who have drastically improved their CRM, have still a long way to go achieve accuracy in their forecast
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