In any business venture, continuity is a very important aspect that keeps the business coordinators always alert and thinking. This is the aspect that analyzes business expansion, growth and improvement thus it forms a very important base to business management.
So as to ensure and enhance continuity, there is need for the business to have excellent future plans which are mostly termed as strategic plans. However, continuity does not only comprise of the plans but also have a lot of speculations in the plan as well as consider any treads in the field of economy that the business is operating in. this is what entails the whole process of business forecasting and management (Robert, 2010).
There are actually for major techniques applied in business forecasting that aim at ensuring that the speculations made are at very close proximity to the truth as per that time. These techniques are briefly discussed below.
- Delphi technique. In this forecasting technique, the main aim is to compare and contrast research findings of different experts who have carried out their researches without consultations. This means that the data collected by the different individuals is investigated to try and find the proximity that exists between their conclusions. Since the research is in the same field, the proximity is expected to be very close even if it is carried out in different market structures. If the proximity is minimally narrow, there is a very high probability that the forecasted event or phenomenon will occur. This element of data collection from different locations and market structures without any consultation of the researchers offer a very good analysis of the future making this technique very valuable. This is because different individuals, having carried out different researches and analyzed their data independently cannot have similar conclusions on an idea that is not possible or achievable. This technique can be claimed to be the source of trend analysis that aims at gradual stepwise analysis of data and changes in the market that aims at producing the best forecast explorations. Historical data pertaining to a certain product is obtained and any trends in its market or production looked into. This creates confidence even in the process of forecasting about the product.
- Scenario writing. In this technique, the researcher does some ground work in using different criteria that the aspect under research can be approached using. This creates a number of different storylines of the research and it is up to the researcher to evaluate the best criterion of using while forecasting on the future. Evaluating the strengths of this approach, it is more incorporative of diversified approaches making it very possible for the researcher to have a wide knowledge about the item under research. This also gives a forum of wide alternatives for the researcher to choose from. Different contents from different criteria can be combined as well to come up with the best conclusion that can be drawn from the situation. However, this approach suffers a drawback in decision making process. The process of forecasting is very slow since it involves evaluation of a number of approaches. This process is time consuming and tedious.
- Subjective approach. In this approach, the researcher is allowed to include personal feelings and tastes which may be very important to the forecasting process. This is allowed mostly in cases where the researcher is the same as the implementer of the researched proposals.
- Time series approach. This is the last primary approach that is applied in forecasting. In this approach, time cycles of the business event are closely studied to try and interpret how they occur. This means that at different times, things are different. From the past, a researcher can easily predict the most probable outcome of the whole process. This is mostly true in markets where flexibility is predictable and the aspects of demand and supply remain relatively constant or increase at relative rates to have no surplus of any. (Robert, 2010)
Having defined some of these aspects, I would like to have a short discussion on how a certain multinational company (Coca cola Inc) is forecasting on its markets. This discussion will take into consideration a wide variety of ideas which will be all tied up in the four above categories.
The major requirement for any forecasting is planning. This means everything in forecasting is based on strategic planning. As for the company I am analyzing, there are three strategic plans already underway. The first plan, which also forms our topic of discussion, is for the African market. According to reliable sources to the company, use of products from this company is gaining root in Africa. This has led to elevated levels of demand making the supply to be much less. As part of the strategic plans of the company concerning this market, one of the major plans is to have a local production firm in Africa. The company so far exports ready products to the market in large tanks only for bottling in the market areas. Creating a production firm near the market would call for production plans as well. This would mean that the production activities of the company will be decentralized. Closely related to this is the idea of increasing the employee pool due to opening up of new production sites. This company will also trigger an increased production in other related companies as well including the bottling companies (Vanessa, 2010).
Analyzing the applicability of the four techniques employed in forecasting in my company, the Delphi approach helps the company have a better understanding of the market trends. This is a very important aspect in any business since sales and profits are the main goals in any business venture. This technique will help the company assess the possible demand in the future thus be in a position to make effective and applicable strategies. Also, it is these techniques that will enable the company have different views and tastes from the market thus be in a position to produce what satisfies the market fully (Vanessa, 2010).
Taking a look at subjective approach, the company will be in a position to have enough information from within and outside its scope to make decisions which are guided by person tastes and feelings. This has been done in the anticipated market thus the company has benefited by having a wider scope acceptance of the market. The company has gone further to have certain brands associated with certain activities. For example, sprite is a brand associated mostly with games while coca cola is associated with traditional activities.
Under time series approach, the current market statistics indicate that the sales of the company have increased greatly between the years 2000 and 2010 in the African continent. Some perturbations in the anticipated market have also been witnessed and serve guidelines on some of the possible drawbacks in the market. However, this aspect is still deeply rooted in subjective approach (Vanessa, 2010).
Taking a look at the anticipated changes in production, the company has anticipated reduced production costs since the cost of exporting the drinks in tanks is more compared to that of local production. This would mean that the company will have to cut down some of its labor force and become more digitized and decentralized in management approach. With this in mind, the company will have to beat their competitors like Pepsi Company which is also having similar plans. Production will also shift from labor intensive to capital intensive making the quality of the final product very high. As a result, the product will command a larger market share.
Taking a look at the material requirement in the strategy, there will be no big difference in materials requirement except for the field of production where some production activities will be mechanized. This will mean reduced manual labor input and higher quality production which can even be possible around the clock. As a result, the production materials will be used less as compared to the current levels where levels are subject to production labor input. Factors like products becoming expired while still waiting processing. In case a competitor like Pepsi will not be using similar production technology, the competitors will have higher production costs and therefore lower quality products and consequently less profit generated (Vanessa, 2010).
Lastly on material usage and general production, the company will be at a point to fully mechanize its production and decentralize its production and management. This will serve the purpose of spreading of risks as well as reducing the retail price of the products. As a result, revenues generated will be increased thus the company will develop and increase its market share.
In conclusion, forecasting is a very important tool in business since it helps analyze business continuity. This in return helps in development of strategic plans which are up to date and goal oriented. As a result of forecasting, a business venture stands a very good chance of maintaining and probably expanding its market share. Using the four above discussed approaches help one to remain within the borders of forecasting while still fixing the target at the main goal of the business entity (Robert, 2010).
Robert C. 2010. What are the four primary forecasting techniques? Retrieved from http://smallbusiness.chron.com/four-primary-forecasting-techniques-4489.html
Vanessa C. 2010. Coca Cola marketing plan, retrieved from http://www.slideshare.net/vanessalyle19/coca-cola-marketing-plan