Seven Processes Of Practical Management

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SEVEN PROCESSES OF PRACTICAL MANAGEMENT - PART 1B
Forecasting

This is a function of management as proposed by Henri Fayol. It is a process of predicting a future event and forms the basis for reducing the risk in all decision making. Successful forecasting depends on effective qualitative (judgemental) and quantitative (mathematical) methods and the ability to analyse data and results. Forecasts are rarely perfect because of their random nature and are more accurate for grouped data and over shorter time periods. The correct model needs to be chosen based on the amount and kind of available data, the degree of accuracy needed, the timeline and the presence of data patterns and trends. Forecasts affect the way a business is run and any decisions that are made by supporting strategic and tactical planning. Forecasting is extremely important in all areas of management.
There are steps to be taken by managers when forecasting;
• Decide what to forecast
• Draw up a timeline
• Select and test the model to be used
• Evaluate and analyse appropriate data
• Write a forecast
• Monitor the accuracy of the forecast
Every forecast should include an estimate of error and should be tested before choosing a model, which should reflect the organisation’s needs and match the data available. No single technique works in every situation but enough time must be allowed to bring in any necessary changes. Forecasts may be subject to human error. The forecasting process is there to help managers
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