ADVANTAGES OF FORECASTING

Forecasting plays a vital role in the process of modern management. It is an important and necessary aid to planning and planning is backbone of effective operations. Thus the importance or advantages of forecasting are stated below:

1.         It enables a company to commit its resources with greatest assurance to profit over the long term.

2.         It facilities development of new products, by helping to identify future demand patterns.

3.         Forecasting by promoting participation of the entire organization in this process provides opportunities for team work and brings about unity and co-ordination.

4.         The making of forecasts and their review by managers, compel thinking ahead, looking to the future and providing for it.

5.         Forecasting is an essential ingredient of planning and supplies vital facts and crucial information.

6.         Forecasting provides the way for effective coordination and control. Forecasting requires information about various external and internal factors. The information is collected from various internal sources. Thus, almost all units of the organization are involved in this process, which provides interactive opportunities for better unity and coordination in the planning process. Similarly, forecasting can provide relevant information for exercising control. The managers can know their weakness in forecasting process and they can take suitable action to overcome these.

7.         A systematic attempt to probe the future by inference from known facts helps integrate all management planning so that unified overall plans can be developed into which divisions and departmental plans can be meshed.

8.         The uncertainty of future events can be identified and overcomes by an effective forecasting. Therefore, it will lead to success in organization.