Week 2: Best Practices 1

Chapter 1 It’s Not Just about Forecasting

The following are the key points in the chapter. Elaborate on each point in at least 30 words.

• Understanding economics can help you to diagnose the causes of increases or decreases in sales volumes and costs.
  • Economics plays a role in diagnosing causes of increasing and decreasing sale volumes and costs because it involves deposit growth, cost increase, and the market. Economics helps make decisions that need to be made to prevent money loss and increase sales with the product at hand. Also as the market fluctuates, cost for supplies can change and understanding how to budget helps prevent overspending.
• Business decisions are about the future and must rely on a view of the future.
  • Business decisions are about the future because the past and present can be predictors of the future for a business, but the process entails more than history. Understanding what customers like and how to produce those products can help structure a business with a promising future. Forecast accuracy helps business predict the growth of a domestic product or any product that is needed for a business and can be turned into a numerical point of view.
• Economics can help you form a more accurate vision of the future, compared to other common methods of forecasting.
  • The economy has the power to redirect a businesses future. When referring to a bank, as discussed in Chapter 1, coming out of a recession can create low commercial loan volume and can last for a year or two. This assumption has been created due to past recessions and has a steady outcome where the volume increases out of the blue. Preparing for a bump in a business comes from understanding the economy.
• As a business manager, you should focus more on the broad magnitudes of changes rather than specific numbers.
  • Broad magnitudes of change helps a business manager understand the overview of patterns rather than taking the time to focus on specific numbers. Looking at patterns from other similar companies can help a manager understand what types of change could be possible for their own company as well. Specific numbers are not the whole picture and making it a point to dive deeper into overall numbers of a business is crucial.