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. *If you have an understanding of economics you can better predict events in the economy and how they might effect your sales. If there is a scarcity of a good that you use to manufacture your products, then your prices might have to increase to compensate for the lower volume of products.

• Business decisions are about the future and must rely on a view of the future. *If you do not have a view of the future, then you do not have any goals you are striving to achieve. You also will not be thinking about any future problems you or your company may face.

• Economics can help you form a more accurate vision of the future, compared to other common methods of forecasting.

  • Learning the patterns of the economy can result in a more accurate vision of the future. The economy does not normally make drastic changes without those changes being known beforehand, such as a major world event.

• As a business manager, you should focus more on the broad magnitudes of changes rather than specific numbers.

  • It is important to focus more on the broad magnitudes of changes because you will have a better understanding on what to expect from your company’s “highs and lows.”