Techniques for successful forecasting By Gary Drake and Michael Kerrigan
Instructions: Carefully read the following article on forecasting and then do independent research that allows you to answer the following questions concerning this article and forecasting. Your point value on this exercise depends on the completeness of your answers in relationship to other students in your class. Be sure to include the question you are answering as part of your submission for each response.
1. You have been selected the CEO of an "average" company in the United States. You were hired because of your prior performance in forecasting at a similar company. You first task is to organize the forecasting process for this company. What will go into this process? Who will you involve? What resources will you use (data, people, outside experts, etc. to make this process work for your new company? Be explicit in your response.
2. Discuss the differences between Pro Forma budget analysis and capital budget analysis. In your forecasting for your new company which one will you use and why?
3. How would you keep your company's forecast updated and current? What would be the length of time for your forecast, and what role will benchmarks play in determining the success or failure of your forecast? Explain.
4. Discuss in some detail your view of the impact of either inflation or deflation on a company's forecast for sales in the next 5 years. Explain how you think an "average" company will be impacted by either, what they should do to prepare for this occurrence, and what you would do if you were this "average" company's CEO.
5. Does your current or former employer use forecasting? What it successful in forecasting future sales and trends? Why was it either successful or not successful? What would you do in forecasting differently?