2.2

Question 1

Sales forecasting

Answer 1

Sales forecasting forms the basis of all financial planning.

Question 2

Purpose of sales forecasting

Answer 2

The sales forecast will be the basis of the following:

1) HR plan- ensure that the right number of staff with the right skills are employed.
2) Marketing budget- decide how to allocate its marketing to budget to struggling products.
3) Budgets- Spending in each department.
4) Production planning- If the business wants to satisfy the demand for the product, it needs to make sure that the right number of products are made, and before that, enough raw materials are made. Planning production and inventory levels will work backwards from sales forecasts.

Question 3

Factors affecting sales forecasts

Answer 3

1) Consumer trends (tastes and habits)

Consumer trends may depend on:
- Demographics
- Globalisation
- Affluence
- Economice variables
-