Forecasting and Environmental Scanning

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Questions and Answers

What is the primary goal of environmental scanning?

To detect emerging trends and anticipate changes in the environment.

How does competitor intelligence support organizational strategy?

It gathers information about competitors that can influence strategic decisions.

What distinguishes quantitative forecasting from qualitative forecasting?

Quantitative forecasting uses mathematical rules applied to past data, while qualitative forecasting relies on expert judgment.

What type of forecasting technique is time series analysis?

It is a quantitative forecasting technique that fits a trend line to past data to predict future outcomes. Signup and view all the answers

What is the purpose of regression models in forecasting?

They predict one variable based on the known or assumed values of other variables. Signup and view all the answers

In what way do econometric models utilize regression equations?

They simulate segments of the economy to predict future economic states. Signup and view all the answers

How do economic indicators help in forecasting?

They provide data that can predict future economic conditions, such as discretionary income. Signup and view all the answers

What does the substitution effect in forecasting refer to?

It predicts how new products will impact existing products under specific circumstances. Signup and view all the answers

What is the Jury of Opinion technique in forecasting?

It combines and averages the opinions of experts to make predictions. Signup and view all the answers

How does Sales Force Composition technique assist in forecasting?

It relies on the sales personnel's estimates of customer types and quantities needed. Signup and view all the answers

Define Customer Evaluation in the context of forecasting techniques.

It combines estimates from established customers' purchase histories. Signup and view all the answers

What is a PERT network and how is it represented?

A PERT network is a flowchart diagram that illustrates the sequence of activities in a project, using circles to represent events and arrows to indicate activities. Signup and view all the answers

What is the primary goal of benchmarking?

To identify and adopt best practices that contribute to superior performance. Signup and view all the answers

What are the two key estimates needed to calculate the expected time for an activity in project management?

The two key estimates are the optimistic estimate (to) and the pessimistic estimate (tp). Signup and view all the answers

List the types of resources considered in an organization.

Financial, physical, human, intangible, and structural/cultural resources. Signup and view all the answers

What formula is used for calculating the expected time for an activity (te) in project management?

The formula for calculating expected time is te = (to + 4tm + tp) / 6, where tm is the most likely estimate. Signup and view all the answers

What process does benchmarking follow?

The typical benchmarking process includes four structured steps. Signup and view all the answers

What role do customer’s purchase histories play in forecasting?

They provide estimates on future demand and inform product offerings. Signup and view all the answers

Why are delays on the critical path particularly concerning in project management?

Delays on the critical path are concerning because they can directly impact the overall project timeline, leading to potential project overruns. Signup and view all the answers

How does a flowchart help in understanding project activities?

A flowchart helps in understanding project activities by visually mapping out the order and interdependencies of tasks, making it easier to identify process flows. Signup and view all the answers

How can an organization benefit from understanding its structural/cultural resources?

It can leverage these resources to optimize internal processes and enhance performance. Signup and view all the answers

What is the primary purpose of budgeting?

To allocate resources to pay for designated future costs. Signup and view all the answers

Describe incremental budgeting.

It is the process that starts with the current budget and evaluates if additional resources are needed. Signup and view all the answers

What distinguishes zero-based budgeting from other budgeting methods?

It begins from a point of zero, not relying on the current budget as a foundation. Signup and view all the answers

Name one suggestion to improve the budgeting process.

Collaborate and communicate within the organization. Signup and view all the answers

What does scheduling entail in the context of management?

It involves detailing the activities, order of completion, responsible individuals, and deadlines. Signup and view all the answers

Who developed the Gantt chart, and what is its purpose?

Henry Gantt developed the Gantt chart to show actual and planned output over time. Signup and view all the answers

Why should goals guide budgeting rather than the other way around?

Budgets should be tools to achieve goals, not constraints that shape them. Signup and view all the answers

What role does flexibility play in effective budgeting?

Flexibility allows adjustments in response to changing circumstances and needs. Signup and view all the answers

What is the expected time to approve the design and get permits in the construction project?

10 weeks Signup and view all the answers

Which event follows the digging of the subterranean garage?

Erect frame and siding Signup and view all the answers

How many weeks are required to install windows?

3 weeks Signup and view all the answers

What events must be completed before installing the internal wiring?

Construct floor, install windows, and put on roof Signup and view all the answers

What is the total time from the start of the project until it's turned over to the building management group?

42 weeks Signup and view all the answers

What does breakeven analysis help identify in a construction project?

The point at which total revenue covers total costs Signup and view all the answers

Describe the method to compute the breakeven point.

Graphically or using a formula Signup and view all the answers

What event takes the least time among those listed in the project timeline?

Turn over to building management group Signup and view all the answers

What is the primary purpose of a Gantt chart in project management?

To visualize the schedule of tasks over time. Signup and view all the answers

How does a load chart differ from a Gantt chart?

A load chart schedules capacity by entire departments or specific resources. Signup and view all the answers

Define slack time in the context of a PERT network.

Slack time is the amount of time an activity can be delayed without affecting the project completion. Signup and view all the answers

What is the significance of the critical path in a PERT network?

The critical path is the longest sequence of activities that determines the shortest project duration. Signup and view all the answers

What role do events play in a PERT network?

Events are the end points representing the completion of major activities. Signup and view all the answers

Why is it essential to identify every significant activity when developing a PERT network?

Identifying significant activities ensures that all necessary steps are accounted for in project planning. Signup and view all the answers

How do activities contribute to the structure of a PERT network?

Activities represent the time or resources required to progress from one event to another. Signup and view all the answers

What does a PERT network flowchart depict?

It depicts the sequence of activities required to complete a project along with their time or cost. Signup and view all the answers

Study Notes

Environmental Scanning

Aims to identify emerging trends and interpret environmental changes.
Includes gathering competitor intelligence.
Managers are expanding their scope to consider global factors affecting organizations.

Forecasting

Forecasting is predicting future outcomes.
Quantitative forecasting uses mathematical rules on past data.
Qualitative forecasting relies on expert judgment and opinion.

Forecasting Techniques (Quantitative)

Time series analysis: Fits a trend line to a mathematical equation and projects into the future.
Regression models: Predicts one variable based on other variables.
Econometric models: Uses regression equations to simulate economic segments.
Economic indicators: Predicts future states based on current economic conditions; used to assess the impact of a new product or service.

Forecasting Techniques (Qualitative)

Jury of opinion: Combines expert opinions.
Sales force composition: Combines sales personnel estimates from customers' opinions.
Customer evaluation: Combines estimates from established customers regarding their purchases.

Benchmarking

Identifies best practices among competitors or non-competitors.
Focuses on achieving superior performance.
Steps involve identifying benchmarks, forming a planning team, gathering data, and analyzing to find performance gaps for improvements.

Allocating Resources

Resources include: financial, physical, human, intangible, and structural/cultural assets.
These assets are used in developing, manufacturing, and delivering products to customers.

Budgeting

Budget: a numerical plan for allocating resources to specific activities.
Budgeting: the process of allocating resources to pay for future costs.

Budgeting Approaches

Incremental budgeting: Starts with the current budget and managers decide if additional resources are needed and justify requests.
Zero-based budgeting: Starts with a zero base and plans based on justifying each element needed for the project.

Budget Types

Cash budget: Forecasts cash on hand and needed.
Revenue budget: Projects future sales.
Variable budget: Accounts for costs that vary with volume.
Fixed budget: Assumes a fixed level of sales or production.
Profit budget: Combines revenue and expense budgets for various units to determine profits.
Expense budget: Lists primary activities and allocates dollar amounts to each.

Improving Budgeting

Collaborate and communicate effectively.
Be flexible, and ensure goals drive budgeting decisions instead of the other way around.
Coordinate and use planning software appropriately.
Remember budgets are tools for smart management, and profits come from effective management not just budget processes.

Scheduling

Scheduling involves detailing activities, their order, personnel responsible, and completion times.
Gantt chart: A scheduling chart illustrating planned and actual output over a period.

Load Charts

A modified Gantt chart that schedules capacity using departments or specific resources.

PERT Network Analysis

PERT network: A flowchart showing the sequence and associated time/cost of project activities.
Events: End points representing major activity completion in the project.
Activities: Time/resources needed to advance from one event to another.
Slack time: Delays allowed in individual activities without delaying an entire project.
Critical path: The longest sequence of project activities.

Project Planning Process

Defines objectives.
Identifies and establishes activities/sequences and resources.
Estimates times for activities, and determines project completion dates.
Compares with pre-defined objectives and ensures resource requirements are met.

Scenario Planning

Scenarios are consistent views of potential future outcomes.

Break-Even Analysis

Break-even analysis identifies the point where total revenue exactly covers total costs.
This point can be calculated graphically or using a specific formula.

Linear Programming

Linear programming is a mathematical technique for solving resource allocation problems.

Project Management

A project is a unique, temporary endeavor with a definite beginning and ending.
Project management involves getting project activities completed on time, within budget, and according to specifications.

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Description

This quiz covers the methods of environmental scanning and various forecasting techniques, including quantitative and qualitative approaches. You will explore how managers gather information on trends and make predictions using both mathematical models and expert judgment.