The Benefits of Forecasting in the Market Place

Published: 29th May 2009
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The method of estimation in unknown business situations, or forecasting, is a beneficial way of securing the best possible knowledge of what might happen in the market place. We might also refer to this as prediction, however, that is less specific and more general. Forecasting is of particular importance to manufacturing companies so as to predict what the consumer demand might be for a particular product. A company needs to forecast as correctly as possible what the production demand for their product will be to avoid unnecessary expense with regards stocking levels.

It is also important to employ forecasting in forming companies as it will enable those forming the company to be aware of the possible future demand for what they will be providing. However, it must also be remembered that forecasting is not fault free, dramatic economical changes that are not predicted can affect the accuracy of a company's forecast. Such unforeseen changes can be either negative or positive. On the positive side of things, very recently the Japanese company Hitachi announced revisions to the company's consolidated business forecasts for the year ended March 31st 2009 due to recent business performance. It announced that operating income would be better than originally forecast, by 87.0 billion yen because of improved performance.

On the other side of the coin, an example of negative conditions can be seen in the Irish food and drinks industry, which is down to the rapid decline in Ireland's economic situation, and people are turning to discount food stores to shop for groceries, turning their backs on more expensive outlets. In the Ireland Food and Drink report 2009 we are told that, "BMI is now forecasting that sales at Irish discount stores will grow by 33% in the five years to 2012 representing the fastest growth rate of any retail format." Unfortunately, while discount stores are likely to see significant growth, it is alcohol sales that have witnessed contraction as a 7% drop has already been reported.

Lorraine McInerney is currently working as a Freelance Web Content Article Writer. She has an Arts Degree in English Literature and Ancient Classics, and she is currently a post-graduate student of English, specializing in Post-Colonial Literatures. She will be writing her thesis this summer on "Liminality in Post-Colonial Women's Writing".

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