Benefits of Forecasting

Forecasting has the following benefits:

1. Future oriented:

It enables managers to visualize and discount future to the present. It ,thus , improves the quality of planning.

Planning is done for future under certain known conditions and forecasting helps in knowing these conditions. It provides knowledge of planning premises with which managers can analyse their strengths and weaknesses and take action to meet the requirements of he fugue market. For example, if the TV manufacturers feel that LCD or plasma televisions will replace the traditional television, they should take action to either change their product mix or to start manufacturing LCD / plasma screens. Forecasting, thus, helps in utilizing resources in the best and most profitable business areas.
Forecasting helps in identifying areas that need managerial attention. It saves the company from incurring losses because of bad planning or ill defined objectives.

3. Coordination:

Forecasting involves participation of organizational members of all departments at all levels. It thus, helps in coordinating departmental plans of he organization at all levels.

4. Effective management:

By identifying the critical areas of organization’s functioning, managers can formulate sound objectives and policies for their organization. This increases organizational efficiency and effectiveness in achieving their plans.

5. Development of executives:

Executives engaged in forecasting develop the mental, conceptual and analytical abilities to do things in planned, systematic and scientific manner. 

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