While some businesses decide to disregard or put little to no work into forecasting, it is one of the most useful tools in successful companies. Every company has an idea to be operating in the future, so one would begin to think why some managers and companies fail to complete this process.
This can be an important treatment to anticipate future inventory, results, and possible most severe and best-case scenarios. With this thought, we can look into an effective company with an unexpected event that altered their planned forecast of financials and sales. Target has been a successful retail company for quite some time. However, the year within, Target has experienced many issues with customer’s credit card information being hacked using their system. Within an article titled, “Target provides more bad information as it cuts profit perspective, discloses more theft details” by Andria Cheng, the expected forecast is described. Prior to the credit cards breach, Target sales were better than expected and were staying that way.
However, with this unexpected event, sales began to drop and projected forecasts started to sway. Now, with this new information, Target has begun to look into a new projected forecast with these estimated damages taken into account. Target began to cut future outlooks and re-estimate vacation sales. The graph below shows the drop in Target’s stock and sales from the first orange dot to the next orange dot. The graph then continues on to show an expected development for Target’s future sales, with a very unstable prediction of ups and downs.
This article ties into our conversation of forecasting by displaying how even top companies can suffer unforeseen occasions and change their predicted quantities and plans. However, although Target might not have accounted for this event in their future, they might have taken into consideration some unforeseen event and the harm it may cause. With this thought, Target has taken the steps to readjust their forecast and plans for the rest of the future. What steps should Target take to re-estimate their numbers initially? Would Target be best by compiling data on other related businesses? Would intuition/judgement be a great decision to estimate the near future sales for Target? Cheng, Andria. “Target provides more bad information as it slashes profit view, discloses more theft details”. Market Watch: The Wall Street Journal.
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