Business Forecasting

Paper Summary:

This paper deals with the functions and purpose of business forecasting within a business organization or business environment. The paper also critically discusses the limitations of the main methods of business forecasting and how these shortcomings can be overcome. The methods discussed include exponential smoothing, regression analysis and ARIMA (autoregressive integrated moving average).

From the Paper:

"The role of business forecasting within any business environment cannot be overemphasized. Business forecasting has for a long time been an activity of interest because of its close interaction with major finance, fortunes obtained and lost and the criticality of economic trends for the social and political welfare of a business and of course a country. In fact, it is an integral part of any business organization, serving as an indispensable tool and an unavoidable task necessary for safeguarding the future goals and objectives of any firm or rational individual within a market structure. No rational decision can be made without, at least implicitly, taking some view of the future. Often in earlier times, forecasting activity was rather an informal process, but nowadays, it now recognised that more formal methods of business forecasting will contribute to increased forecast accuracy."

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