examples of companies that successfully employed forecasting
Businesses are faced with challenges daily. A significant source of challenge for nosiness is the changing business environment. These changes affect the sales, inventory management as well as the competitive advantage of a business. Therefore, companies need to include a strategy that helps them in making future predictions. This paper focuses on examples of companies that successfully employed forecasting.
One of the major objectives of the Coca-Cola Corporation is the maximization of profit. In the year 2016, the sales of Coca-Cola Company reduced at a rate of 6.16% annually, as compared with the previous year. (Mentzer, Moon, & Smith, 2005). However, the sales were expected to rise by 5.56% in the preceding year. The profit made by a company is directly proportional to sales and other expenses. In the year, 2017, the sales of Coca-Cola Corporation were reported to have increased. This shows that they had made correct forecasting. Initially, the corporation used to rely on historical data to make a decision on the quantity to manufacture and the quantity to deliver. They often made overproduction, which was not favoring the company. However, after considering forecasting, the company is reported to save close to $9 million annually.
Tesla Electric Company wanted to amass a massive competitive advantage in the electronics industry. (Cheney, 2011). They also wanted to increase their market share, which they intended to release the latest and the greatest mobile device. Initially, the company relied on guesswork and costly market research while planning and strategizing for the release of a new product line in the market. For instance, the company did release a product in the market which did not meet their sales predictions. To avoid making a similar mistake in the future, the company decided to change strategies and adopt forecasting. The company was able to employ aspects such as consumer sentiments employment rates and retail sales projections in identifying marketing demography that would be appealing to their products. By employing the forecasting strategy, the company was able to get back into making products that met their sales predictions.
Quick Trip, a convenience store, was faced with a challenge in inventory management. They needed to reduce the inventory cost, but they lacked the tools for doing so. They needed to have exact internal knowledge for them to make precise predictions necessary to meet their inventory management objective. The company turned into a forecasting strategy, which eventually proved helpful. They dove into elements such as economic factors for specific markets. The company was able to make informed predictive inventory management models. (Abdullah & Abdullah, 2012). This strategy helped the company avoid million of losses caused by inventory overages.
The fast-changing global markets are entirely impacting business. Organizations need to make an informed, accurate, and precise prediction to keep up with the changes. Several factors impact the global economy, which in turn influences the demand and supply of products and services. (Hanke, Reitsch, & Wichern, 2001). One of the best ways to ride along these changes is making predictions based on forecasting strategy. Forecasting is based on two broad methods. These are qualitative and quantitative methods. Tesla Electronic Company employed the econometric model in making their forecast. It was successful because they compared factors such as unemployment rates and the GDP. The Coca-Cola Corporation used time series methods making its forecast. It succeeded since they incorporated historical data in making fine details that predicted their sales. Similarly, the Quick Trip convenience store used the indicator approach, which gave them success.
Overly, forecasting is an essential element for business, especially in the modern world of business, which is dynamically changing. Therefore, every organization needs to adopt this strategy.