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Environmental Forecasting

Environmental forecasting involves predicting future external conditions that may impact a firm's performance or require strategic changes. It includes identifying relevant variables, collecting information on those variables, selecting appropriate forecasting techniques, and ongoing monitoring. The main types of environmental forecasting are economic, social, political, and technological forecasting. Economic forecasting predicts overall economic conditions, social forecasting analyzes demographic and lifestyle trends, political forecasting assesses changes in policies, and technological forecasting determines the pace of technological change and its impacts.

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582 views10 pages

Environmental Forecasting

Environmental forecasting involves predicting future external conditions that may impact a firm's performance or require strategic changes. It includes identifying relevant variables, collecting information on those variables, selecting appropriate forecasting techniques, and ongoing monitoring. The main types of environmental forecasting are economic, social, political, and technological forecasting. Economic forecasting predicts overall economic conditions, social forecasting analyzes demographic and lifestyle trends, political forecasting assesses changes in policies, and technological forecasting determines the pace of technological change and its impacts.

Uploaded by

Kavita Thakur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Environmental Forecasting

Submitted To: Submitted By


Deepika Sharma
Roll No.
Introduction of Environmental
Forecasting
• A way of estimating the future events that have a major impact on the
enterprises.
• Environmental forecasting is a technique where by managers attempt
to predict the future characteristics of the organizational
environmental and hence make decisions today that will help the firm
deal with the environment of tomorrow.
• An act of predicting the future economic conditions on the basis of
past and present information.
Definition
• “Estimating the intensity, nature, and timing of the external forces
that may effect the performance of a firm, disrupt its plans, or force a
change in its strategies.”
Steps of Environmental Forecasting
1) Identification of relevant environmental variables
2) Collection of information
3) Selection of forecasting techniques
4) Monitoring
1)Identification of relevant environmental variables
Before managers can begin to formulate an effective strategy, they must
make a critical examination of the firm’s environment. All environment
variables do not have the same relevance to all industries. Assessing the
strategic situation is the first phase in determining the content of the
proper strategies for a firm.
2) Collection of information
Once the environmental variables are identified, the next step is to collect
the information that is needed. It involves the identification of sources of
information, determination of the types of information to be collected,
selection of methods of data collection and collection of information.
3) Selection of forecasting techniques
The choice of the forecasting technique depends on the nature of the
forecasting decision, the amount and accuracy of the available
information, accuracy required, time available, importance of the
forecast, the cost, etc.
4) Monitoring
Monitoring is very important as the characteristics of the variables or
their trends may undergo changes. Further new variables may emerge
as critical or the relevance of certain variables may decline. It is
therefore necessary to monitor changes.
Types of Environmental forecasting

Types of Environmental Forecasting

Economic Technological
Social Forecasting Political Forecasting
Forecasting Forecasting
1) Economic Forecasting: It is done to forecast the general economic
conditions, like boom or depression, upswing and downswing of the economy.
Corresponding to these forecasts, sale and revenues of the business go up or down.
2) Social Forecasting: There are number of factors which have impact of
business. Important factors include population growth/decline, age structure of
population, occupational pattern, rural-urban distribution of population, factors
related to family, lifestyle, income levels etc.
3) Political Forecasting: It is an important part of environmental forecasting.
Changes in the relative power of political party, political forecasts also cover
industrial policy, commercial policy and fiscal policy.
4) Technological Forecasting: It finds out the rate at which technology is
changing, what will be the impact of new machines and equipment’s on existing
plant and machinery, should the firm continue with the existing machines or replace
them, in case of replacement, should they buy the the new machine or take it on
lease, what will be the impact of these decisions on profits etc.
Techniques of Environmental
Forecasting

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