4.3 - Sales Forcasting (HL - Unit 2) Flashcards

1
Q

Sales Forecasting

A

Predicting the sales volume for a business/product in the future

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2
Q

Benefits of Sale Forcasting

A

Help divide production numbers

  • Less likely to have unsold stock/hold less stock

HR Planning

  • How many employees do we need?

Can help with loan applications

  • Predictions may help persuade banks

Cash flow management

  • Ensure enough cashflow is on hand
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3
Q

Limitations of Sales Forcasting

A

Just a prediction

  • Things may change in the future

External factors may change everything

  • E.g. recession, Covid-19

Some industries are changing very quickly

  • AI company

New businesses don’t have past sales numbers

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4
Q

Alternative Ways of Sales Forecasting

A

Based on experience or hunch

  • Use the experience of the industry to predict the future
  • Intuitive decision making

Look at similar business

  • Look at the competition to see sales growth trends

Market Research

  • Hire a market research company to do it
  • Look a publically available market research
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5
Q

Seasonal Variations

A

Regular variations at certain times of the year
E.g. shops see higher sales in July/Aug

So if extrapolation to Jul in Year 3
- Take account of the higher sales in the summer

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6
Q

Cyclical Variations

A

Variations according to the economic cycle

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