process of predicting or estimating thefuture based on past and present data.provides information about thepotential future events and theirconsequences for the organisation.may not reduce the complications anduncertainty of the future.
increases the confidence of themanagement to make importantdecisions.Forecasting is the basis ofpremising.
Features of ForecastingForecasting in concerned with future events.It shows the probability of happening of future events.It analysis past and present data.It uses statistical tools and techniques.It uses personal observations.
Steps in Forecasting1.Analysing and understanding the problem2. Developing sound foundation3. Collecting and analysing data4. Estimating future events5. Comparing results6. Follow up action
Importance of ForecastingProvides relevant and reliableinformation about the past and presentevents and the likely future events.It gives confidence to the managers formaking important decisions.It is the basis for making planning premises.It keeps managers active and alert to facethe challenges of future events and thechanges in the environment.
Limitations of Forecasting Involves a lot of time and money. Long-term forecasts will be less accurate as compared to short-term forecast. Forecasting is based on certain assumptions. If these are wrong, forecasting will be wrong. Forecasting is based on past events. But history may not repeat itself at all times. Forecasts are subject to human error.