Forecast is something we revolve around on a daily basis. It is around us so much, that sometimes we forget how big of a role forecasts play in our lives. For example, a weather forecast could mean very little to an individual before he/she steps outside the house however, on the other hand it could mean a lot to a company who has spent over $100,000 to organize an outdoor event.
When we look at a specific trend in the market, we will predict the future. This prediction leads to a forecast. In most cases forecasts are far from what actually takes place however, in some cases they are accurate and close to accurate.
I believe that forecasts should be done considering all the factors. It does not always have to be positive which is why being too optimistic about the future can cause problems for a company. I worked for a retail company last year where some important decisions were made based on forecasts. One of such decisions included how many people to schedule for work on a particular day. For example if the sales on Saturday were forecasted to be high then more employees were called that day to work but on the other hand if sales were forecasted to be low, less employees would be working. An advantage of that for the company was saving cost however, the biggest drawback was that forecasts are not always accurate. On a Monday, they forecasted fewer sales and only a few employees were working but more customers showed up and it got difficult to manage for those few employees.
Companies make daily decisions based on forecasts. These would include how much inventory should be kept, how many employees should be hired. These decisions are more crucial than they appear. If the company is not prepared for the “what if’s”, then they are at big disadvantage, especially if they are in a competitive environment.
We are living in a technological world where forecasts play a huge role however, with the high advancement in technology, things are more unpredictable than they seem and the forecasts tend not to be very accurate. For example an article on www.bloomberg.com , “HTC Cuts Sales Forecast on Competition from Apple, Samsung”, talks about how the sales forecast had to be changed, in this case lowered, because Apple and Samsung had growing sales and had forecasted higher growth. Like I mentioned earlier we live in a world of forecasts. One forecast is based on another. In this case, HTC’s sales forecast was affected by the sales forecast of Apple and Samsung.
The question I would like to ask you is, have you ever been in one or more situations where you based a decision on an inaccurate forecast? How did it affect you?
Above article taken from http://www.bloomberg.com/news/2011-11-23/htc-cuts-sales-forecast-on-competition-from-apple-samsung-1-.html