Forecasting plays a huge role in a business’s success. Making good estimates about the demand for their products and what sales will be is the main purpose of forecasting.
In a car dealership, management has to forecast market demand for its cars and order from the manufacturer accordingly. Medium-range forecasting is used for sales planning and budgeting. Finding the right balance of supply and demand allows the dealership to order enough cars to meet the demand of its customers. The financial, marketing and personnel planning is based on the forecasted sales. Giving good estimates for demand is vital to the business as it takes each car ordered 3-4 months to be produced and delivered. Failure to do so would result in having a dealership with no stock and no cars to sell. This would result in turning potential customers away and losing business to other competitors. By predicting good demand, the dealership would have a competitive advantage over others and gain more market share.
I remember when I decided to purchase a new car and when I selected the car, I was told it was unavailable and I would have to wait for two months and had therefore ended up buying another brand.
How many times have you gone to a dealership, liked a car and asked for availability and were told you would have to wait for a month or two? How frustrating is that?
Another vital issue for a dealership and would highly reflect on their image is having a good projection of demand for car parts. Unavailability of parts would result in unsatisfied customers, reflect negatively on the brand image from bad word of mouth and the dealership would end up losing sales. A customer wants a comfortable ride for years and would definitely not purchase a car that has no available parts.
Thus, you can see how important forecasting is to a business and the role it plays in its success.