Statistics for Business Forecasting
by MAURICE S. NEWMAN Partner, Executive Office
Presented at a seminar of the American Management
Association, New York—March 1968
MOST BUSINESS today is run by plan rather than by chance. The management of the business knows, and in most cases the whole organization knows, where the business is trying to go and how it plans to get there. Various units of the organization are given definite goals to strive for and the future environment is anticipated insofar as this can be done. Most employees will respond favorably to such a challenge. They like to be held responsible for a certain result and expect that their effort to attain such results will be properly rewarded.
Not so long ago a business forecast was likely to be a rough approximation
of what management would like to sell, the familiar 10 per cent over last year. In some cases this might be modified to what it was thought the company might sell or to what it might be able to produce. Now that business, in many situations, can create its own demand, business
forecasting involves the application of highly sophisticated statistical techniques to an ever increasing array of available economic data. The statistical techniques are not new, but the application of them to business data is relatively new. Furthermore, the particular nature of certain business problems and the non-random characteristics of certain business data have resulted in some useful revisions of statistical techniques.
SOURCES OF DATA
One of the powerful forces behind this recent development is the large amount of business statistics now available. For instance, a publication
by the Office of Business Economics of the United States Department
of Commerce, entitled Business Statistics, contains 243 pages of statistical data covering the entire business spectrum. In addition, it contains 197 pages of explanatory notes to the statistical series. There are 102 private or quasi-public sources, nine government departments, and 16 independent agencies that are listed as contributors of these data. This publication is for sale by the Superintendent of Documents at $2.00 a copy, and it is a good place to begin a career in business forecasting.