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In other words, competitive advantages would be created (Royer, 2005). Within the longer term, a suggestion is made in the combination of qualitative and quantitative methods in order to increase the accuracy of the forecasting processes.
4. Inflation projections
Aside from the integration of customer and supplier traits in the completion of the forecasting efforts, in is also recommended for the company to also integrate other macro economic traits in its projections. This necessity is pegged to the fact that EBBD is an intermediary company, distributing the items produced by others to the end consumers. This feature makes it more sensitive to movements within the economy and increases the necessity for other issues to be considered in projections.
At this level, it is recommended for EBBD to consider changes in the international price of oil, which could generate impacts on its logistics costs. Also, it is necessary for the organization to consider the inflation projections, which could generate immediate and serious impacts on the prices of the products bought from the suppliers, the costs of distribution, and the final retail price to the end consumer.
The inflation estimations are essential since the economic indicator has the capability to impact the revenues and budgets of EBBD. In this sense, the company could consider projecting the quarterly inflation based on past values of inflation, in a method similar to their current internal forecasting method. Additionally, they could also consider forecasting based on the annualized growth rate of the real GDP or regression with core CPI inflation (Meyer and Pasaogullari, 2010).
The completion of the inflation estimations is a highly complicated endeavor, and the recommendation at...
These projections are available through specialized channels and their main advantage is that they do not require direct involvement from the EBBD financial specialists. Additionally, they are continually reviewed and modified in order to best reflect the realities of the changing macro environment (Belke and Polleit, 2010).
5. Conclusion
Ultimately then, it is recommended for the firm to preserve its current forecasting system since this is highly relevant and strong by relying on internal data and past data. Still, it is necessary for EBBD to enhance its forecasting through the inclusion of information from customers, suppliers and on inflation movements.
References:
Belke, a., Polleit, T., 2010, Monetary economics in globalized financial markets, Spinger
Lindeke, R., Forecasting models, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&ved=0CHcQFjAH&url=http%3A%2F%2Fwww.d.umn.edu%2F~rlindek1%2FPOM%2Fassets%2FIE3265_Forecasting.ppt&ei=5O_NT7KwDrCa1AWS7YWTDA&usg=AFQjCNGNbb42WCmY02dyuxVM1UEpjEj6mA last accessed on June 5, 2012
Meyer, B.H., Pasaogullari, M., 2010, Simple ways to forecast inflation: what works best? Federal Reserve Bank of Cleveland, http://www.clevelandfed.org/research/commentary/2010/2010-17.cfm last accessed on June 5, 2012
Mishkin, F.S., 2007, Monetary policy strategy, MIT Press
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