Four Steps to Forecast Total Market Demand

Four Steps to Forecast complete Market Demand F. William Barnett Harvard caper Review No. 88401 HBR JULYAUGUST 1988 Four Steps to Forecast Total Market Demand F. William Barnett Recent history is filled with stories of companies and sometimes in time entire industries that have made grave strategic errors because of wide of the mark industrywide demand forecasts. For example: ? In 1974, U.S. electric utilities made plans to bifurcate generating aptitude by the mid-1980s based on forecasts of a 7% annual growth in demand. Such forecasts are polar since companies must begin building new generating plants five to tenner years before they are to come on line. exactly during the 19751985 period, load actually grew at notwithstanding a 2% rate. Despite the postponement or cancellation of many projects, the excess generating capacity has hurt the industry financial situation and led to higher(prenominal) customer rates. ? The petroleum industry invested $500 billion ecumenic in 1980 and 1981 because it expected oil prices to rise 50% by 1985. The estimate was based on forecasts that the market would grow from 52 million barrels of oil a day in 1979 to 60 million barrels in 1985. Instead, demand had locomote to 46 million barrels by 1985.

Prices collapsed, creating huge losings in drilling, production, refining, and shipping investments. Bill Barnett is a principal in the Atlanta office of McKinsey & Company. He is a leader of the trues Microeconomics Center, and his client work has focused on crinkle unit and corporate strategy. ? In 1983 and 1984, 67 new types of note personal computers were introduced to the U.S. market, and most companies were expecting explosive growth. One industry vaticination service projected an installed base of 27 million units by 1988; another predicted 28 million units by 1987. In fact, only 15 million units had been shipped by 1986. By then, many manufacturers had ramshackle the PC market or gone out of trading altogether. The inaccurate suppositions... If you want to get a full essay, launch it on our website: Ordercustompaper.com

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