BUSINESS: U2: CH 30: SALES FORECASTING

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7 Terms

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Sales forecasting

A quantitative method of predicting what a firm's future sales will be

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Seasonal variation

Sales change depending on the season of the year

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Cyclical variations

When sales change depending on cycle of the economy during growth and recession phases

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Random variation

Sales change but there is no way to predict them

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Benefits of sales forecasting

-operations: can help with production schedule, whether capacity is needed to expand

-HR: increase staff

-Marketing: new marketing campaigns, reduction in prices that increase slowing sales, intro of new products

-Finance: monitor cash flow, invest or wait on new project, find new source of finance

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Drawbacks of sales forecasting

- time consuming

- ignores external factors (less accurate)

- new businesses cannot use it

- interpretation of data is biased

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factors affecting sales forecasting

- consumer trends

- Economic variables

- actions of competitors