Forecasting :

In management Forecasting is a decision-making tool that uses historical data

to predict future events and outcomes. It's a planning technique that helps
businesses prepare for uncertainty and make informed decisions.

“According to Neler and Wasserman”,

"Business forecasting refers to the statistical analysis of the past and current
movement in the given time series so as to obtain clues about the future
pattern of those movements."
Forecasting can be used for a variety of purposes, including:
 Budgeting
 Planning
 Estimating future growth
 Charting next moves
 Projecting where the company is going
 Managing stock out or surplus stocks
 Managing short expiry

Need of Forecasting :
Forecasting is important for businesses because it helps them plan for the
future, make decisions, and improve efficiency:

 Planning
Forecasting helps businesses understand what's happening in their operations and the
market, and what challenges and opportunities they face. This helps them make plans
for the future, such as adjusting operations to improve efficiency.

 Decision making
Forecasting provides businesses with reliable information about the past and present,
and predictions about the future. This helps them make important decisions, such as
investment decisions, market entry strategies, and product development.

 Efficiency
Forecasting helps businesses optimize production, logistics, distribution, budgeting,
and resource allocation.
 Goal setting
Forecasting helps businesses set measurable and realistic goals. By analyzing data,
businesses can determine optimal growth or improvement rates.

 Collaboration
Forecasting requires collaboration and coordination from all team leaders, which can
help businesses adapt to fast-changing conditions.

Forecasting Techniques & Routes

Qualitative methods: These types of forecasting methods are based on judgments,

opinions, intuition, emotions, or personal experiences and are subjective in nature. They
do not rely on any rigorous mathematical computations.

Quantitative methods: These types of forecasting methods are based on

mathematical (quantitative) models, and are objective in nature. They rely heavily on
mathematical computations.
 1. Delphi Method of Forecasting :
The Delphi method, also known as the estimate-talk-estimate technique (ETE), is a
systematic and qualitative method of forecasting by collecting opinions from a group of
experts through several rounds of questions.

The Delphi method is a forecasting technique that uses a panel of

experts to make predictions about future events and trends. The method is
based on the idea that the collective wisdom of a group is greater than the
knowledge of any individual.

The Delphi method was originally developed in the 1950s by RAND to

predict the impact of technology on warfare. It has since been applied in many
fields, including health care, education, management, environmental science,
and social sciences.

Here are some key characteristics of the Delphi method:

 Expert panel
A group of experts with relevant knowledge and experience are selected to participate
in the method.

 Anonymity
Participants remain anonymous throughout the process, even after the final report is
completed.

 Structured feedback
A facilitator guides the process by collecting and summarizing the experts' responses,
and then sharing them with the group.

 Iterative rounds
The experts revise their predictions based on the feedback from previous rounds, and
the process continues until a consensus is reached.

2. Nominal group technique (NGT)

NGT is defined as a structured method for group brainstorming that encourages
contributions from everyone and facilitates quick agreement on the relative importance
 of issues, problems, or solutions. Team members begin by writing down their ideas,
then selecting which idea they feel is best.

The steps to follow in NGT are :

(a) Divide the people present into small gropus of 5 or 6 members, preferable seated

around a table.

(b) State an open-ended question.

(c) Have each person spend several minutes in silence individually brainstoming all the

possible ideas and note these ideas.

(d) Have the groups, collect the ideas by sharing them round-robin fashion, while all are
recorded in key term, on a flip-chart. No criticism is allowed, but clarification in
response to cations is encouraged.

(e) Have each person evaluate the ideas and individually and anonymously vote for the
best ones.

(f) Share votes within the group and tabulate. A group report is prepaerd, showing the
ideas receiving the most points.

g) Allow time for brief group presentations on their solutions.

3. Jury of Executive Opinion :

It is a forecasting method that involves a group of experts or managers within
a company making predictions about the future form their own opinions
initially from the data given. It's also known as the Delphi forecast.

Working :
1. Each expert forms their own opinion based on the data provided.
2. The experts review each other's work and modify their own forecasts.
3. The final opinions of the individuals are combined to create a composite forecast.

Characteristics :
 The jury of executive opinion method can help a team complete a forecast
quickly and consider multiple perspectives. Some companies may use this
method along with a quantitative method.
  Benefits of the jury of executive opinion method include: speed and expert
insight.

 Drawbacks of the jury of executive opinion method include: potential bias and
groupthink.

4. Scenario Projection :
Scenario forecasting is a strategic method businesses use to plan for various potential
futures. These scenarios are typically based on visible risks and assumed uncertainties
surrounding a set of plausible situations.

In short, modeling multiple “what-if” scenarios helps you prepare for the future.

The three scenarios force decision makers to ask :

(a) Can we survive the pessimistic (नननननननननन) scenario?

(b) Are we happy with the most likely scenario?

(c) Are we ready to take advantage of the optimistic scenario?

Forecasting Routes
There are mainly two routes in forecasting -

(i) Top-down: This is the approach where international and national events affect
the future behaviour of local variable. It means that even if we are operating in domestic
region only then also we cannot escape from the changer occurring (a) the global level. It
happens when there is large number of trade of the country with rest of the world.

(ii) Bottom-up: Here, local events affect the future behaviour of local variables, i.e.,
we are not bothered about global changes. It's changes are within the boundaries of nation
then only, we will be affected by them.
 Delegation of authority
Delegation of authority is the process of transferring authority from a superior to
a subordinate. It can be used to divide labor and decision-making responsibility among
a group of people. The goal of delegation of authority is to ensure that tasks are
completed smoothly and effectively.

Importance of Delegation of Authority :

The importance of delegation of authority has been stated below:

 Motivates workers: Charging proper authority and duty makes workers feel
empowered, valued, and inquired. It can boost motivation and morale.
 Develops skills: Delegating tasks with authority provides growth
opportunities and helps workers develop new skills as they take on more duties.
This benefits both workers and the alliance.
 Spreads the workload: Delegation allows managers to distribute work and
decision-making among capable subordinates. This reduces managers’
workloads and makes them more efficient.
 Enhances efficiency: When authority is delegated to the appropriate level,
routine decisions can be made and tasks carried out faster. This improves the
overall firm’s efficiency.
 Aligns authority and duty: Delegating the proper amount of authority and
duty creates accountability. Workers are assigned to meet expectations.
 Encourages problem-solving: Authority and duty provide a setting where
workers are motivated to think innovatively to solve issues independently.

Principles of Delegation of Authority:

The principles of delegation of authority are as follows:

 Match authority with duty: Workers must be given enough authority to

fulfill the duties given to them. Authority without adequate duty leads to
problems.
 Convey expectations: Managers must convey the extent of authority
delegated, performance standards, limitations, and targets to aids.
 Evaluate performance: Tasked authority and version results should be
regularly reviewed to ensure duties are being met. Penal action may be needed.
 Select the right workers: The workers selected for trusted authority
should have the competence, skills, experience, and willingness to take on more
duties.
  Retain control: Even after delegating authority, managers retain the right to
intervene, make final decisions, and take corrective action if needed.
Accountability remains with the manager.
 Equity is important: Authority should be charged relatively based on
workers’ roles, capabilities, and competencies. It should not be arbitrary.
 Promote charge: Delegation aims to assign workers and give them
ownership of duties and tasks, boosting motivation and initiative.
 Be flexible: The extent of delegated authority may need to shift and grow over
time as workers prove themselves capable of handling more.

Process of Delegation of Authority:

The process of delegation of authority is as follows:

 Identify the task or duty to be delegated : Managers should choose

duties suitable for delegation based on priorities, workload, and subordinates’
capabilities.
 Select the right worker for the task: Leaders should match
subordinates’ skills, experience, and interests with the delegated responsibility.
They should select workers willing and able to accept more authority.
 Communicate clear anticipations: Managers must clearly explain to
subordinates what is expected of them, including performance standards,
timelines, resources available, authority limits and reporting relationships. Goals
and objectives should also be unambiguous.
 Provide necessary resources: Workers need proper tools, support,
funding, and data to finish delegated tasks successfully. Managers should ensure
that needed resources are in place.
 Grant appropriate authority: Workers are given enough decision-making
power and freedom of action to end tasks and achieve objectives. Authority
matches duty.
 Monitor performance and provide feedback: Bosses should regularly
check in with aids, provide guidance, and clarify expectations if needed.
Feedback helps workers improve and stay on track.
 Evaluate results and make corrections: Managers should evaluate
whether delegated duties have been fulfilled satisfactorily. Penal action may be
required if not. Redelegation may happen.
 Recognize good work: Workers who successfully fulfill delegated duties
should be acknowledged and cited. This backs delegation and inspires aids.
 Retain final authority: While delegating authority broadly, managers retain
the right to intervene, override findings and take penal actions when vital.
 Reassess delegation over time: As workers prove capable of handling
more, managers can delegate greater authority or duty in a growing fashion.
Delegation is revised as needed.

Need :
 Saves time
Delegation allows leaders to focus on higher-level decisions and strategic tasks.

 Improves efficiency
Delegation reduces bureaucracy and only requires critical decisions to be made in the
boardroom.

 Helps with risk

Delegation can help avoid unnecessary risk by allowing decisions to be made by those
with the most expertise.

 Prepares employees
Delegation can help prepare employees for more responsibility in the future by
allowing them to develop new skills and gain knowledge.

 Builds trust
Delegation can help build trust within teams by showing that employees are respected
and trusted.

 Increases impact
Delegation can increase the amount of output that can be achieved by a team.

 Promotes flexibility
Delegation can help organizations respond quickly to changing market conditions and
emerging opportunities.

Difficulties with delegating authority include:

 Fear of losing control: People may be afraid of losing power, influence, or status if
they delegate.

 Lack of trust: People may doubt the delegatee's capability or dependability.

 Guilt or accountability: People may feel guilty or selfish for delegating, or that they
are burdening the delegatee.
  Inadequate balance of authority and responsibility: Too much autonomy
can lead to abuse of power, while a person without authority may not be able to carry
out their obligations.

 Lack of experience: A manager and their team may lack experience, which can
make delegation challenging.

 Delegating to the wrong person: Delegating a task to the wrong person or team
can stress them out.

Here are some tips for delegating authority more effectively:

 Communicate expectations: Clearly communicate expectations to the delegatee.

 Provide support: Provide regular feedback and support to the delegatee, such as
check-ins, guidance, and praise.

 Consider the delegatee's experience: Consider the delegatee's experience and

track record when deciding how much authority to delegate.

Decentralization:
Decentralization refers to a specific form of organizational structure where the
top management delegates decision-making responsibilities and daily operations to
middle and lower subordinates. The top management can thus concentrate on making
major decisions with greater time abundance.

Advantage Decentralization:
 Empowered employees
Employees feel more valued and involved, which can lead to increased confidence and
creativity. This can also reduce turnover rates and allow companies to hire from
within.

 Improved performance
Managers at each level have more room to make adjustments and find solutions to
challenges. This can lead to improved quality of administration and department
performance.
 Faster decision-making
Lower-level managers don't have to follow a hierarchy, so they can make decisions
more quickly. This can be especially helpful when a problem needs to be addressed
quickly.

 Time for top-level management

Top-level management can focus on more critical issues and business areas.

Disadvantages of Decentralization :
 Coordination issues: Decentralized systems can be difficult to align and
consistently. This can be due to the need for consensus and coordination, and the
multiplicity of participants.

 Decision-making delays: Decentralized decision-making processes can be

delayed, especially when consensus is needed or input from multiple parties is
required.

 Lack of uniformity: There may be a lack of uniformity in the policies followed

across different units.

 Conflict: Decentralization can create conflict among managers of different divisions.

 Financial burden: Decentralization may increase the financial burden on the

organization.

 Hiring costs: Decentralization may require hiring trained and qualified personnel.

 Operational costs are high: Decentralization can have high operational costs.

 Duplication of tasks: Without effective communication, each instance can work on

the exact solutions in parallel, duplicating tasks.

 Objectives not achieved: If the responsibilities are diluted, and there is no

accompaniment from the central power, the objectives are not achieved