Business Forecasting: Prepared By: Sujata Chamlagain MBA 1 Sem

Business forecasting
Meaning and Definition:

Business forecasting is an act of predicting the future economic
conditions on the basis of past and present information. It refers to the
technique of taking a prospective view of things likely to shape the
turn of things in foreseeable future. As future is always uncertain,
there is a need of organised system of forecasting in a business.
Thus, scientific business forecasting involves:

(i) Analysis of the past economic conditions and
(ii) Analysis of the present economic conditions; so as to predict the

future course of events accurately.
In this regard, business forecasting refers to the analysis of the past

and present economic conditions with the object of drawing inferences
about the future business conditions. In the words of Allen,
“Forecasting is a systematic attempt to probe the future by inference
from known facts. The purpose is to provide management with
information on which it can base planning decisions.
Leo Barnes observes, “Business Forecasting is the calculation of

reasonable probabilities about the future, based on the
analysis of all the latest relevant information by tested and
logically sound statistical econometric techniques, as
interpreted, modified and applied in terms of an executive’s
personal judgment and social knowledge of his own
business and his own industry or trade”.
The essence of all the above definitions is that business forecasting is a
technique to analyse the economic, social and financial forces affecting
the business with an object of predicting future events on the basis of
past and present information.
Prepared by: Sujata Chamlagain MBA 1 st Sem

Steps of Forecasting:
The process of forecasting consists of the following steps,
also described as elements of forecasting:
1. Developing the Basis:
The first step involved in forecasting is developing the basis of
systematic investigation of economic situation, position of industry
and products. The future estimates of sales and general business
operations have to be based on the results of such investigation. The
general economic forecast marks as the primary step in the forecasting
process.
2. Estimating Future Business Operations:

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The second step involves the estimation of conditions and course of

future events within the industry. On the basis of information/data
collected through investigation, future business operations are
estimated. The quantitative estimates for future scale of operations are
made on the basis of certain assumptions.
3. Regulating Forecasts:
The forecasts are compared with actual results so as to determine any
deviations. The reasons for his variations are ascertained so that
corrective action is taken in future.
4. Reviewing the Forecasting Process:

Once the deviations in forecasts and actual performance are found
then improvements can be made in the process of forecasting. The
refining of forecasting process will improve forecasts in future.
Benchmarking
The objective of benchmarking is to understand and evaluate the current position

of a business or organisation in relation to best practice and to identify areas and
means of performance improvement. Benchmarking occurs across all types of
companies, including private, public, nonprofit, and for-profit, as well as industries

e.g., technology, education, and manufacturing. Many companies have positions or
offices in the company that are in charge of benchmarking.
Companies use benchmarking as a way to help become more competitive. By
looking at how other companies are doing, they can identify areas where they are
underperforming. Companies are also able to identify ways they can improve their
own operations without having to recreate the wheel. They are able to accelerate
the process of change because they have models from other companies in their
industry to help guide their changes.
What Are Some Different Types of Benchmarking?

Best practices - This is a benchmark report where companies choose to look at a company or
companies that they aspire to be like. By choosing companies that are on the leading edge of the
industry, they can identify best practices that help improve their own company.
Peer benchmarking - This is a benchmark report where companies choose to look at other
businesses very similar to themselves. This allows companies to make sure they are staying
competitive with similar businesses.
SWOT - This is a type of benchmarking report where companies gather data by looking at strengths,
weaknesses, opportunities, and threats to help understand their climate.
Collaborative benchmarking - This is benchmarking as a part of a group. Many industries have
associations they can join e.g., The Association of Information Technology Professionals, and The
National Education Association. These collaborative associations allow for members to provide
information to the association. The association can then provide benchmarking and best practice
reports for the membership.
Benchmarking Process
Step one: Determining benchmark focus - During this phase, the company determines the
specifics of the research project. (e.g., which companies will they include in the research and what
types of metrics they will compare).
Step two: Planning and research - During this phase, the company puts the resources together to
implement the project (e.g., develop surveys, seek cooperation from other companies, and find
databases already available).
Step three: Gathering data - During this phase, the data is collected through the methodology
determined in the planning and research phase.
Step four: Analysis - After gathering the data, the company uses statistical techniques to examine
and create the findings.
Step five: Recommendations - After analyzing the data and areas where the company can improve,
recommendations are developed.
Step six: Implementation - After reviewing recommendations, the company implements those that
are feasible.

Feasibility Study
The word ‘feasibility‘ means the degree or state of being easily, conveniently, or
reasonably done. If something is ‘feasible,’ it means that we can do it, make it, or
achieve it. In other words, it is ‘doable’ and also ‘viable.’ A feasibility study is an
analysis used in measuring the ability and likelihood to complete a project
successfully including all relevant factors. It must account for factors that affect it
such as economic, technological, legal and scheduling factors. Project managers
use feasibility studies to determine potential positive and negative outcomes of a
project before investing a considerable amount of time and money into it.

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Business forecasting

Meaning and Definition:

Thus, scientific business forecasting involves:

(ii) Analysis of the present economic conditions; so as to predict the

In this regard, business forecasting refers to the analysis of the past

Leo Barnes observes, “Business Forecasting is the calculation of

Prepared by: Sujata Chamlagain MBA 1 st Sem

2. Estimating Future Business Operations:

The second step involves the estimation of conditions and course of

4. Reviewing the Forecasting Process:

The objective of benchmarking is to understand and evaluate the current position

Prepared by: Sujata Chamlagain MBA 1 st Sem

What Are Some Different Types of Benchmarking?

Prepared by: Sujata Chamlagain MBA 1 st Sem

Prepared by: Sujata Chamlagain MBA 1 st Sem

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