Sales Forecasting And Budgeting.

Added on - 21 Sep 2019

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Running Head:Sales Forecasting And BudgetingSALES FORECASTING AND BUDGETING
Sales Forecasting And Budgeting2Table of ContentsLO1: Understand the impact of sales forecasting on organisational planning................................3LO2: Understanding the factors affecting sales trends....................................................................4LO3: Understanding on the quantitative and qualitative techniques of sales forecasting...............5LO4: Understanding the significance of monitoring the actual sales figure against the forecastsales..................................................................................................................................................6LO5: Understanding budgeting methods.........................................................................................8Reference List................................................................................................................................10
Sales Forecasting And Budgeting3LO1: Understand the impact of sales forecasting on organisational planning1.1 Evaluation of the impact of sales forecasting on organisational planningSales forecasting stands as a vital task in a company’s organisational planning related tofinancial planning. It is a highly useful self-assessment tool which uses past as well aspresentstatistics ofsalesto predict a company’s future performance in relation to sales in anintelligent manner. With an appropriatesales forecast, a company becomes able to plan for itsoperational future. It is a key element to be considered for every company while conducting itsregular business. The realism is a good forecasting of sales help a company to improve anddevelop its strategic planning by increasing its knowledge about the marketplace. Sales forecastallows a company to manage all the aspects of its business virtually. It helps to measure marketshare, sales value and sale volume to formulate a highly effective sales budget. Though it is time-consuming and complex, but the benefits it provides to a company is unmatched(yourbusiness.azcentral.com, 2019).1.2 Evaluation of the applicability as well as the usefulness of short, medium and long-termsales forecastsSales forecasts are done for shirt, medium, and long-term and it stands very useful fordifferent parts of a business organisation. Short-term sales forecasts are generally done for sometactical reasons whereas medium-term sales forecasts are made for making minor strategicdecisions like budgeting at the initial level. Long-term sales forecasts are made for making majordecisions that are strategic in nature. Short-term and long-term forecasts are applied forproduction planning and for determining customers’ priorities. It helps a company to reduce leadtime, supply risk, purchase schedule. Medium-term forecast is used to meet accounting andfinance related needs those are related to budgeting whereas long-term forecasts assist toformulate cash flow planning, long-term plans for profit generation, and planning forinfrastructure. Overall, all the periodic sales forecasts are useful for a company and its differentdepartments as these are applied for implementing operational plans in a timely manner (Ingramet al.2015).
Sales Forecasting And Budgeting41.3 Evaluation of the influence of sales forecasting on the sales managers along with theirsales targets, objectives, remuneration systems, and budgetingSales forecasts assist managers to evaluate raw dataand help them to share theirexpectations in relation to sales quantity to the salespersons of the company. Sales forecasts useto underpin the objectives of sales managers by providing them a framework by using whichperformance could be measured and the functional goals. It also provided motivation anddirection, thereby strengthens the manager's leadership. It impact managers' decisions on settingup a sales target, and budgeting. The remuneration system is also influenced by such forecastsindividual performance work towards meeting the sales target set by the managers.LO2: Understanding the factors affecting sales trends2.1 Evaluation of the internal factors that might affect a company’s sales trendsAccording to, the Seven S framework of McKinsey, the internal factors that are oftenbecome responsible for affecting sales trends of a company include organisational skills, style,structure, staff, systems, strategy, and shared values. These factors affect sales trend if thesefactors influenced by a company are deliberate, consequential, or accidental actions (Singh,2013).2.2 Evaluation of the external factors often affects sales trendsThe external factors that might affect a company’s sales trend are classified into macroenvironmental factors and micro environmental factors. The micro environmental factors foundaffecting a company’s sales trends are customers, stakeholders, and competitors. On the otherside, macro environmental factors are comprised of competition, economic, social, technological,political, legal, environmental, cultural, and ethical factors (Gupta, 2013). For analysing macroenvironmental factors that affect sales trend the most significant theoretical frameworks are
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