04 Oct ompanies use strategic planning for business devel
ompanies use strategic planning for business development such as expansion (David & David, 2017), diversification and so on. For the development of a strategic plan, one of the critical elements is forecasting what goals are realistic and to what extent a company will be able to achieve them. Companies try to predict the behavior of the variables of their business environment and arrive at possible sales and profit figures.Various qualitative and quantitative techniques are used for strategic forecasting (David & David, 2017).1. Trend extrapolation: past and current observations are extended to forecast future trends based on quantitative relationship. For example, if Coca-Cola knows cold drink consumption per individual and it also knows population growth, then Coco-cola will be able to project the growth of aggregate use in the future.Organizations also need to identify what may happen because of new possible trends. For example, change in government policies may affect forecasting effectiveness.1. Scenario construction: In this forecasting technique, perspectives from different people are used to explore alternative states of the future. Individuals are asked to describe the visualization of future political, cultural, economic and technological dimensions of a particular issue related to the industry. Assuming that Pepsico wants to launch a new product and may use perspectives of an expert such as economist, technological people and politician about future growth. Quantitative judgments are applied to separate likely scenarios from those who are less plausible. Sometimes, experts or individuals are asked to imagine the future.In some case, customers may also be asked to imagine what they want in the future and then describe a series of event.For example, ABC Corporation wants to enter a market with a new mobile handset. The company may ask customers and experts what they want in a new handset.1. Historical analogy: Planning teams are requested to look backward to think about what may happen in the future. For example, a company may ask interest groups in an ongoing historical struggle of forces and counterforces, goals, limitations. Planners may be asked about to describe a particular problem such as what issues are faced in T-mobile connection while calling and data connectivity.2. Delphi Technique: Delphi technique rely on group interactions to arrive at a collective opinion. Different persons or experts respond individually and confidentially to a sequence of actions.All the above forecasting techniques focus on predicting patterns of behavior and explore how these patterns will change or stay the same as a basis for anticipating what will happen in the future.ReferencesDavid, F. R., & David, F. R. (2017). Strategic Management: A Competitive Advantage Approach, Concepts, and Cases (Sixteenth ed.). Boston: Prentice Hall.
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