Various Forecasts Help Assess The Business Environment When Formulating Plans And Strategies

VARIOUS FORECASTS HELP ASSESS THE BUSINESS ENVIRONMENT WHEN FORMULATING PLANS AND STRATEGIES: Economic Forecast: The economic environment significantly impacts prospects, so economic forecasts are important. Relevant factors include GDP growth, income levels, sectoral investment/output, price trends, trade etc. Many published short-, medium- and long-term forecasts are available from international agencies, government etc. Firms may need to generate their own forecasts where reliable public forecasts lack needed details. For example, power sector forecasts indicate investment potential in related sectors. Short term forecasts help sales and marketing strategy. Quantitative and qualitative methods are used. Social Forecast: Various social factors like demographics, lifestyles, attitudes profoundly affect business, necessitating forecasting key variables. Considerable published and unpublished forecasts are available on factors like population, birth/death rates, age structure etc. Relevant aspects are covered in the Societal and Demographic Environment chapters. Quantitative and qualitative techniques are used. Political Forecast: Political forecasts help envision the future business scenario. Possibilities like drastic political shifts or sanctions with business impact are not rare. Changes in relative power of parties, ideologies etc. have implications. Some political factors are embedded in social trends. Some changes are unpredictable but many are reasonably predictable, like India's liberalization being indicated by global trends. Factors with international implications require consideration. Techniques like scenario building are common. Technological Forecast: Innovation and new technologies can drastically alter the business landscape, so technological forecasting is crucial. It encompasses emerging technologies and the pace/extent of diffusion and penetration of existing ones. Aspects like future penetration of PCs, internet and implications are relevant. The World Competitiveness Report's technology index reflects abilities to absorb new technologies. Brainstorming and Delphi methods are popular. Key Forecasting Techniques:  Econometric models: Predict major economic indicators through causal relationships like income's impact on demand. Useful where causal data exists and large changes expected. Regression analysis and time series models are common.  Trend extrapolation: Past trends are extrapolated into the future, using simple linear or complex nonlinear relationships.  Scenario development: Alternative scenarios help strategy formulation when accurate forecasts are difficult. Scenarios consider multiple variables in an integrated way to explain alternative futures and implications. Steps involve identifying key issues, assumptions, and variables; describing future scenarios; assessing organizational implications; and developing contingency plans.  Judgement models: Opinions of knowledgeable people are used, like salespeople's views on sales, competition etc. The Delphi method is a refined judgement model using expert panels.  Brainstorming: A group of experts generate, discuss and evaluate ideas and forecasts freely. Useful for technological forecasting.  Strategic issues analysis: Assesses emerging issues' corporate impact, like monitoring racial tensions' worldwide impact on South African business. The aim is timely identification of external changes to formulate organizational responses. An array of quantitative and qualitative techniques generates insights.