Planning and Forecasting
Planning is concerned with future which is highly uncertain. Therefore planners have to make assumptions about the future events. Forecasting is the concerned with future events. It defines the probability of happening of future events.
Forecasting is the process of predicating future condition that will influence and guide the activity, behavior and performance of the organization. It is a systematic attempt to probe the future by interference from known factors according to Gluck. Forecasting is the formal process of predicting future events that will significantly affect the functioning's of the enterprise. Business forecasting refers to analysis of past and current events so as to obtain clues about future trends in the business environment.
On the basic of the forgoing definition, the following factors of forecasting can be identified:
Forecasting is the concerned with future events. It defines the probability of happening of future events forecasting is done by analyzing the past and present events relevant to functioning of the enterprise. Forecasting has become a specialist activity where in several techniques are available for predicting the future. Forecasts are made on the basis of data collected from with in outside the organization. Data may be obtained through informal monitoring and formal scanning of the environment.
The quality or forecasts depends on the reliability of information. forecasts may be made for long term of short term long term forecasts to be less accurate then short term forecasts. Forecasts can be of several types. Economic forecasts are made to predict general economic conditions. Sales forecast predicting the sales for particular enterprise or product are an important part of economic forecasts. Technological forecasts predict changes in the attitudes and preferences of people.
Planning and Forecasting :
Planning and Forecasting are inextricably intertwined each other. Planning is concerned with future which is highly uncertain. Therefore planners have to make assumptions about the future events. Ion order to make correct assumption predictions of future events is essential. Forecasting is the primary source of planning premises which serve as the foundation for building the super structure of planning. The information generated through forecasting service as an input to planning. Forecasting is an integral parts of the planning processes to the extent that is provides the necessary basis of for charting out the future course of action.
Forecasting is prerequisite to planning. Forecasting indicate the probable course of future events, plans decide how to prepare for these events. Without forecasting will be a futile mental exercise and the organization would be at the mercy of future events. For example , a business enterprise predicts competitive technological, social and political conditions likely to prevail over the next five years.
On the basis of these forecasts, it determines objectives, strategies and policies concerning sales grow with , product range, market coverage, competitive initiative, profitability, etc. Planning and forecasting both are concerned with future . However, there is some difference between the two and difference lies in the scope of the two processes. Planning is more comprehensive including many elements and sub processes to arrive at decisions concerning what is to be done, how to be done, and when to be done. Forecasting involves estimates of future events and provides parameters to planning. Planning result in the commitment of resources whereas no such commitment is involved in forecasting .
A large number of persons are involved in the planning processes tough major decision are at the top level. Forecasting is normally done at middle or lower level. It may be entrusted to staff specialties whose decisions do forecasting does not involve decision making but helps in decision making by providing clues about what is likely to happen future. Fourthly forecasting involves what the future is likely to be and is likely to behave. Planning. On the other hand indicates what the future is desired to be and how to make it a reality.
In fact, forecasting is the essence of planning because the future course of action is determined in the light of the forecast made.
Importance Of Forecasting :
Forecasting provides the following benefits :
Key of Planning :
Forecasting provides the vital facts and pertinent information effecting planning. It improves the quality of managerial planning in several ways. With the help of forecasting management can anticipate future trends and decide the appropriate course of action to take advantage of these trends. For example, sales forecasting helps in identifying the future demand partners with which management can plan the development of a profitable product mix. Forecasting focuses attention on the future and thereby brings unity of purpose of in planning.
Means of Coordination :
People at different levels participate in the processes of forecasting kegular interactions between the members of the methods are different from procedures in the following ways
1. Procedure lays down series of whereas a method is concerned with a particular step.
2. Procedures are concerned with the department as a whole whereas methods are specific and guide the performance of particular step of a procedure.
3. Methods lay down the best way of doing a specific step of a procedure.
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