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Sales Forecasting And Budgeting

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Added on  2019-09-21

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This article discusses the impact of sales forecasting on organisational planning, factors affecting sales trends, quantitative and qualitative techniques of sales forecasting, significance of monitoring actual sales figure against forecast sales, and budgeting methods. It also evaluates the applicability and usefulness of short, medium, and long-term sales forecasts, and the methods used by companies to measure and monitor actual sales against forecasted sales.

Sales Forecasting And Budgeting

   Added on 2019-09-21

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Running Head: Sales Forecasting And BudgetingSALES FORECASTING AND BUDGETING
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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
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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 to financial planning. It is a highly useful self-assessment tool which uses past as well as presentstatistics of salesto predict a company’s future performance in relation to sales in an intelligent manner. With an appropriatesales forecast, a company becomes able to plan for its operational future. It is a key element to be considered for every company while conducting its regular business. The realism is a good forecasting of sales help a company to improve and develop its strategic planning by increasing its knowledge about the marketplace. Sales forecast allows a company to manage all the aspects of its business virtually. It helps to measure market share, 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-term sales forecasts Sales forecasts are done for shirt, medium, and long-term and it stands very useful for different parts of a business organisation. Short-term sales forecasts are generally done for some tactical reasons whereas medium-term sales forecasts are made for making minor strategic decisions 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 for production planning and for determining customers’ priorities. It helps a company to reduce lead time, supply risk, purchase schedule. Medium-term forecast is used to meet accounting and finance related needs those are related to budgeting whereas long-term forecasts assist to formulate cash flow planning, long-term plans for profit generation, and planning for infrastructure. Overall, all the periodic sales forecasts are useful for a company and its different departments as these are applied for implementing operational plans in a timely manner (Ingram et al. 2015).
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Sales Forecasting And Budgeting41.3 Evaluation of the influence of sales forecasting on the sales managers along with their sales targets, objectives, remuneration systems, and budgetingSales forecasts assist managers to evaluate raw dataand help them to share their expectations in relation to sales quantity to the salespersons of the company. Sales forecasts use to underpin the objectives of sales managers by providing them a framework by using which performance could be measured and the functional goals. It also provided motivation and direction, thereby strengthens the manager's leadership. It impact managers' decisions on setting up a sales target, and budgeting. The remuneration system is also influenced by such forecasts individual 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 often become 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 these factors 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 macro environmental factors and micro environmental factors. The micro environmental factors found affecting a company’s sales trends are customers, stakeholders, and competitors. On the other side, macro environmental factors are comprised of competition, economic, social, technological,political, legal, environmental, cultural, and ethical factors (Gupta, 2013). For analysing macro environmental factors that affect sales trend the most significant theoretical frameworks are
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