Forecasting as a Tool - Essay Example

Forecasting can be widely regarded as a technique or method of projecting various future elements of a business or other operations. Various techniques can be applied to achieve the objectives of forecasting. While the word forecasting might appear to be somewhat technical, planning for the company’s future is a crucial element of management in any organization; non-profit, business, or other. The long-term accomplishment of any organization is directly tied to how efficiently the management is capable of foreseeing its future and developing proper strategies to deal with possible future situations.

Good judgment, intuition, and an awareness of how the economy is doing might give the management an idea of what is likely to take place in the future. Nonetheless, it is not easy to change a belief concerning the future into a useful and precise number. Forecasting techniques can assist in estimating various aspects of a company's operation. All forecasting techniques can be split into two wide classes: quantitative and qualitative. Most forecasting methods use historical or past data in time series.

Time series is just a set of examinations measured at consecutive points in time or over consecutive periods. Forecasts provide future elements of the time series on a particular variable like sales volume. The division of forecasting techniques into a quantitative and qualitative classification is based on the accessibility of time series information (Zech and Nallau, 5-57). Conclusion Forecasting is a tool that assists management in its effort to tackle future uncertainties. It is mainly based on information from the present, past, and evaluation of trends.

Forecasting begins with some assumptions based on the business’s knowledge, experience, and judgment.