What is Forecast?
A forecast is to estimate or predict in advance that an event will occur or happened. A Forecast is based on the probability that the event predicted will actually occur. Forecasting is a tool for planning. Forecasting helps management to plan for uncertainties of the future. Planning actually is looking at the past and the present to see what the future will be. Forecasting relies on the past and present data and analyzing the trends to what the future will be. Every important decision made today by the business executive in base on some form of forecast.
|Forecasting tool: Regression Analysis developed by the author|
There are many different types of forecasting techniques available and selecting the right forecast technique is very important. Each forecast method has a special use and must be selected with care for the right application. The wrong forest has grave consequences. Looking at the recent USA elections, all the polls predicted that Clinton was going to win the election. It is there important for managers and forecasters to select forecast and also have better understating the range of forecasting possibilities.
Types of forecast techniques.
Forecast techniques can be qualitative or quantitative. Qualitative forecast techniques do not rely on past data but base on qualitative data and may not take the past into consideration. The qualitative forecasting technique is used when data are scarce. An example of qualitative forecasting is Delphi method, scenario planning, and market research. Quantitative forecast techniques focus on patterns and pattern changes, and therefore historical data. Some of the quantitative forecasting techniques are time series, regression analysis and projections and causal models (Field, 2009).
Forces affecting forecast results-Technological and political
A lot of forces can affect the success of any forecasting. Wade (2012) listed a number of forces that can affect the success forecasting with on scenario planning. Some of the forces are political, economic societal and technological.
I will like to discuss two of these forces. The first force I will discuss is technological. A new disruptive technological can affect the success of a prediction. Consider the newspaper case study as an example. The new paper attempt to growth was interrupted by the emerging of the Internet and social network. The Internet emerged as a new technology which made news available online.
The second will be politics can affect the success of forecasting. Rules and regulation made by the Government can affect the success of a forecast. Just this week the result of the US election 2016 has a drastic effect on the stock market. The major stocks on the international stock market were affected by the election results (Shell 2016).
Field, A. (2009). Discovering statistics using SPSS. Sage publications
Shell, A. (2016, Nov 13). History on how presidential elections affect stock markets. ABC News. Retrieved from http://abcnews.go.com/Business/history-presidential-elections-affect-stock-markets/story?id=6185252
Wade, W. (2012). Scenario planning: a field guide to the future. John Wiley & Sons.