Technological Forecasting

1. Technological forecasting:

This forecasting analyses the impact of technological changes on the rims. It finds out the rate at which technology is changing, what will be the impact of new machines and equipments on existing plenty and machinery of the firms, should the firms continuer with the existing machines or replace tem, in case of replacement, should they buy the new machine or take it on lease, what will be the impact of these decisions on the firm’s profits etc.

This forecasting can be done in two ways:
(a) Exploratory forecasting
(b) Normative forecasting

(a) Exploratory forecasting:

Exploratory forecasting projects the future according to predictable technological progress. Business firms assume that current technological developments will exist in future also.

Limitations: This is not and accurate way of forecasting since future is assumed to remain stable, which does not happen. If forecasters do not incorporate the changes in future in their current action, they may not be able to face these challenges when they occur.

(b) Normative forecasting:

This forecasting discounts future to the present. It presupposes changes in future and equips the firms to face them when they occur. This is an active former of forecasting and enables the business enterprise to survive in the changing circumstances.

Limitations: Though this forecasting fully equips the business firms to face challenges, it has only natural inhibitions like. What it the proposed changes do not take place, will the finances be available at the time when required, etc.

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