Impact & Strategy of Globalization - Essay Example

These industries determine sales and can help to plan production. Using these data, Able Corporation will plan production at a steady rate with a fully employed workforce of constant size, which will meet the overall requirements of the sales department. The nature of industrial markets, like the power tool one, consisting as they do of a small number of large customers or potential customers, makes industrial market surveys much simpler and less expensive than similar surveys of potential markets for nationally distributed consumer staples. Because judgment plays such an important role in forecasting, there is an obvious advantage in checking one's estimate against the estimates of other forecasters (Makridakis, 1998).

Another industry is the home repairs and improvement industry. In this sphere, it is difficult to forecast customer demand in sufficient detail and with sufficient accuracy to plan for more than a few months. Special attention should be given to new building materials and repair-improvement processes which create a demand for new products and innovative solutions (Schwolsky, 2004).

Raw materials and supplier relations also affect the power tool industry and influence product cost and price level. Changes in the steel industry and chemical industry affect price levels and can influence the production facilities of the power tool industry. In addition to reflecting trends related to general business over the past, these relationships are an effective manner of checking the forecasted sales against the general business assumptions.

Able Corporation needs to consider demographic factors and economic indicators which influence the results of the multidimensional analysis of ordinal time series. The main factors in statistics and forecasting are internal and external. They include the field of research (narrow or broad), the seasonal fluctuations of demand and sales, direct and indirect competition, population changes and consumer earning. Internal changes are product changes (innovations), the production capability of competitors, raw materials price changes, credit policy changes and labour relations (Brockwell, Davis 2003).

Statistics for the power tool industry show that rank shifts based on net income involved about one-half of the possible uncertainty, and that shifts based on operating revenue are somewhat more uncertain than those based on assets. Where industry statistics are available, many corporations keep records of the pertinent industry statistics and their sales in each such industry. The industry history can be projected to obtain a forecast of total industry sales. One advantage inherent in the use of industry statistics is that many different forecasters are attempting to forecast the same aggregate figure. Other companies interested in the same industry are making forecasts of the same aggregate; these forecasts will be compared and a consensus will usually be reached. The major use of industry statistics, however, is to compare currently released industry sales with the corporation's sales for the same period to determine (Makridakis, 1998).

Total sales of an industry can be forecast by using a known correlation or relationship of such sales with National Disposable Income and the forecast of Disposable Income. On the industry side, the national statistics published by the Department of Commerce provide a wealth of information for forecasting the field of consumer expenditures. The sales of retail stores can serve as an example. Disposable Income is a more satisfactory measure of industry or single corporation sales when the average unit price of the products is relatively small. This broad measure becomes less satisfactory as the average unit price increases and the sale of the product or products is restricted to consumers in the higher income brackets. Capital gains from trading in real estate, commodities, or stocks do not appear as personal income in national statistics but may have an appreciable influence on demand for the more expensive luxury products (Brockwell, Davis 2003). Promotional plans, market studies, changes in market acceptance of the product, and the influence of competitive products all are taken into account in arriving at a forecast for products and product groups. In the end, the summarized forecast that is presented to a management committee of top officers for approval, although summarized by the statistical department, represents the considered judgment of all interested departments (Venables, Ripley, 2003).

To forecast sales and plan production, each segment and external and internal factors should be so presented as to bring out its relationships to the total and to the other segments which its movements affect or by which they are affected. For Able Corporation, only that additional information must be available for use on the occasions when specific problems are encountered that can only be solved by resorting to detail that is not an integral part of the regular forecasting procedure. Correcting a forecast to take account of revisions in the basic data is therefore as much a part of the forecaster's task as is correcting a forecast to take account of new developments whenever the situation has proved different in any significant aspect from what was anticipated.