The Fundamental Principles of Managerial Forecasting - Assignment Example

Managers are required to consider various factors like availability of data, current market condition, and customer demand and they need help in weighing these factors and understanding constantly changing relationships so as to arrive at proper decisions that can bring better results. In today’s business contexts, organizations and their environments are becoming more complex and changes occur rapidly and therefore managers are to consider all marketing-related factors and its critical significance to the forecasting as well.

Good forecasting must be consistent with other parts of the business (Keat and Young, 2009, p 143). For example, when a manger forecast 25 % increase in sales, it must ensure that there are sufficient facilities, labor forces, and raw materials to meet this target. The demand forecast must be based on ‘past knowledge’ because forecasting is a process of foreseeing the future from past performances. Even though in certain cases past results are not so important as in the case of new product development, past knowledge contributes much to the successful demand forecasting ((Keat and Young, 2009, p 143).

A manager conducting forecast must be able to consider the economic and political environment and the probable changes because these factors can cause major changes in the way the business is to be carried out. An effective forecast must be timely as well because if the results are too late, the managerial action also will be late that will lead to business failure (Keat and Young, 2009, p 143).