A Consulting Opportunity in Any Area of Commercial - Essay Example

Consultancy Task: Consultancy One of the most feasible consultancy projects pertain to sales forecasting. This is because it possesses a direct commercial impact. Sales form an integral part of a business organization since it is a principal area of influencing profits. This project would relate to offer of aid in constructing sales forecasts. This would be coupled with helping businesses to improve their sales forecasts. This is a vital consultancy project since it is a factor that many companies ignore. In addition, companies would not wish to pay for research projects do not possess direct financial impact. Organizations invest in business aspects that would profess in terms of sales. In this sense, businesses invest in such research during emergencies. It is vital to highlight that sales projection would best occur at all periods of a business. In the traditional context, revenue projections and cash flows are viewed as the key controls of managing a business. However, sales forecast is a vital management of other figures to business. It becomes a critical point of initiating ventures in an existing business. In sales forecasting, consultancy would achieve a different route since it relies on accurate data. This creates a necessity for having a consultancy system that calculates data for a given piece of advice. For established businesses the consultancy project would help in identifying prior years’ figures that are vital for drafting a sales forecast. This considers the sales’ growth expectations. On the other hand, small businesses would necessitate scenarios of studying the industry. This would relate to compilation of consumers’ profiles and understanding the existing and the expected competition. In the end, the consultancy would help in striking the sense of making sales’ projections. It also aims at heralding sales forecasting as a less cryptic endeavor. This is a time series methodology of establishing a sales’ projection according to a manifesting pattern from the earlier period sales. Another method relates to the regression analysis method. This method also utilizes historical sales as a basis for predicting future sales. In this sense, the forecaster strives to foster a relationship between the sales and the independent variables. Autonomous variables encompass the GDP and population. In simple regression analysis, forecasting involves the use of one independent variable. Conversely, multiple regression analysis would entail the employment of two or more independent variables. The core objective of such analysis relates to the establishment of a mathematical formula. The formula should be describing an association of sales and other variables. This is different from a causal relationship that entails triggering of change by alteration of other figures. On establishment of the formula, the analyst can insert relevant information into the formula such that it expresses the sales forecast. An alternative method would be to arrange with a given company for their product’s test. This strategy is vital for new products. In this sense, the forecasting involves choosing an area of potential customers. Test areas could involve a population of 200, 000 individuals. This creates the capacity for accurate analysis. The core advantage of a market test is the idea that it reveals the consumers’ actual purchases (Trehan & Trehan 2005, p. 307). It does not hypothesize intended purchases. In addition, it professes related factors’ impact on sales. Related factors include elements such as promotion, advertisement, packaging and pricing. Before a business launches a product, the forecasting team would offer advice according to the results from the sample areas of test sales. Since a sales forecast is part of financial estimates, it demands substantial research. This is a data-based activity that becomes obsolete on mere speculations. In established businesses, the project would consider the particular sales history. The sales history points to figures that have arisen out of past sales. It either shows a positive progress or a negative indication of sales. This manifests the business potential and overall revenue value of the business. At this instance, it would be vital to hold a discussion with the business as concerns the ways of improving and stabilizing sales. This could relate to poor marketing skills that contributed to poor sales. In addition, the consultancy process could highlight the management loopholes that create platforms for poor sales. In this sense, old marketing programs could attain improvement or elimination. Conversely, there could be instances of insufficient or no past sales’ data. In this Case, the consultancy process could identify related businesses by focusing on the particular industry. In other instances, it would be vital to check businesses of a similar potential. These industry associations and comparable businesses would help in identifying pricing and revenue potential of a given company. These data would be correlated and refined in such a manner they fit for respective companies. Data would also obtainable through entrepreneurial associations and chambers of commerce. In the next stage, the consultancy process would entail consideration of relevance to a given data. It is crucial to note that the collected data could be an array of information that the process would deem as vital for preparation for sales forecast. However, this stage necessitates sorting out of information according to the degree of usefulness in preparation of forecast. In addition, the process would identify an industry’s methodology of calculating sales forecasts. For instance, sales-per square foot method is an indispensible tool for making sales forecasts in the retail industry. On the other hand, billable hours are useful in constructing sales forecasts for industries such as counseling. Besides, certain industries would necessitate large data because there are varied sections in particular companies. In the next stage, it would be crucial to highlight the indicators that point to a change. There are varied types of indicators. The indispensible indicator in sales forecasts relate to price sensitivity. This is a principle of demand and supply. The principal force that pushes businesses to alter sales is the factor of price. Higher prices invite businesses to improve on the volume of sales. At the same time, consumers withdraw from significant spending on particular services or products. In forecasting, the impact of price on market share or sales volume is a crucial tool. This necessitates collection of historical information on prices. Since competitor prices interact with a given company’s prices, it becomes accurate to develop a causal factor. A causal factor is an adjusted indicator that relates a company’s prices to the industry’s figures. Since the difference is always a meager value, the causal factor helps adjust the small inaccuracies in utilizing sole companies’ prices. In addition, the sales’ forecasts’ could employ economic indices. Certain markets prop on the economic climate for determination of sales. Safe companies would be monopolies who survive under tempestuous economic climates because they offer the sole production points for their market. Economic variables are part of many markets. This suggests that they would be employable in most scenarios. The most reliable source of data would be governmental agencies that record periodic detail of a change towards the economic climate. A relevant instance would relate to datum of purchasing managers’ indices. The consulting company would assist businesses in carrying out specific sales targets. This is the idea of creating market segments. Market segments reveal either as physical or hypothetical entities. In certain physical segments, the consulting company could accord sales targets that fit a particular area. Segments are possible through analysis of income, age, behavior analysis and psychological factors. These segments would differ in terms of price sensitivity and response to products. It is crucial to highlight that this process relies on a diverse team that would comprise marketers, sociologists and economists. These are intensive services that commercial firms not adequately achieve. It would be feasible for firms to concentrate on production and sales as they receive data about their market segments. In addition, the consulting service would entail services of short term or long term analysis. In short term forecasting methods, the consulting group would release analysis that helps to maximize profits out of existing resources. This is the strategy that can counter current scenarios such as low sales. In addition, it could be appropriate for products that possess short shelf lives. Such products would include elements such as food products and newspapers. In this sense, a daily forecast would help establish appropriate means of tackling sales’ challenges. In the short term analysis, the forecasting team would establish safe stock levels for customers’ use. On the other hand, forecasting would involve long term forecasting methods. This is because certain markets present arbitrary projections in the short run. This is evident in fluctuating markets that do not offer distinct values for sales’ projection. In this case, the products would have long shelf lives that necessitate a study of variables within a long period. This is also appropriate for technology products that may take more than a half year in order that they establish stable sales. In the stages of establishing sales forecasts, the consulting group would utilize sales forecasting software. This necessitates high capital investment in software and accompanying hardware. In the recent business age, companies would demand of swift and accurate services. This is only possible through use of sophisticated software that still relies on basic skills of forecasting. The employees would have to acquire skills of operation and manipulation of the software to fit distinct situations. It is possible to deliver certain solutions from Microsoft Excel. For instance, an excel sheet can portray causal demand models that entail templates for updates of subsequent sales data. In a time series model, the excel system is employable since it is a straightforward method. However, increasing complexity necessitates sophisticated systems that can handle varied data and several variables. It is crucial to understand current models and incoming improvements that increase its efficiency. This creates the capacity for constructing a system for use by multiple departments. In addition, the software designing would entail construction of interfaces for relevant forecasting methods. In addition, the consulting entity would deal with inaccuracies in forecasts. This detail exists in two situations. This service would be commercially viable if the consulting group performs accuracy check of data that company that was analyzed in a different place. Inaccurate sales’ projections lead companies into investing in products that may never attain sales. It may also lead companies into cutting back on production in scenarios where they could have achieved better sales. This program allows scrutiny of problems in the supply chain. When the system exists within certain controls, it becomes easier to have accurate forecasts. This is possible through strategies of average accuracy reports and utilization of mean errors. In spite of its feasibility, consultancy in sales forecasting presents notable challenges. The traditional approach of projection assumes that powerful analytic tools can accurately picture a future for an unambiguous strategic direction. However, the real environment might be too uncertain to predict the same. Sales forecasts, on several instances, might not be accurate. The first factor that constrains accuracy pertains to the idea of consumer behavior. Consumer behavior is a dynamic element that transforms according to certain factors. An alteration in income, tastes, needs and fashion alters consumer behavior. In this sense, the sales forecasts may shift according to factors that alter consumer behavior. Besides, there could be non-availability of accurate data. On introduction of a new product, historical information might be scarce. This heralds guesswork as a wrong means of establishing forecasts. In addition, competitors present an obstacle to forecasting. Most businesses prefer competition because it is the core element that establishes sales. However, a business unit cannot understand the strategies of competitors. In this sense, a shift in the plans of competitors may herald predictions as wrong. This is coupled with a shift in the level of competition. In case a highly competitive unit enters the market, previous figures would diverge by a significant margin (Trehan & Trehan 2005, p. 307). Furthermore, entry of substitute products may significantly affect sales forecasts of a given company. Certain limitations relates to the level of trust that would move according to the employment of sales forecasting methods. The use of a single forecasting method presents limitations of the particular model. In this sense, a single model is less reliable in predicting sales. This necessitates a hectic system whereby the average of all methods would give a unified answer. Bibliography Trehan, M, & Trehan, R 2005, Advertising and sales management, FK Publications, New Delhi. Read More