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Strategic Managements

A. What are some possible challenges and limitations of financial forecasting?
b. Describe how the Balanced Scorecard can be used to align the organization¿s strategy from general, to grand-strategy, to tactical, to individual operating unit.
c. Should both qualitative and quantitative measures be used to evaluate the effectiveness of your plan? Why or why not?

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Strategic Management
a. What are some possible challenges and limitations of financial forecasting?

Forecasting means estimating the future values. It is an essential tool in decision making process. The financial forecasts detail the financial aspects of the corporation.
Challenges of financial forecasting

? Information lags can lead to using old information where newer information is available, so that the new trend is spotted later.
? Over reliance on one source without confirmation from other sources can give rise to local distortions of the information.
? Conversely if too many inaccurate sources are used they may incorrectly weight the resulting forecast.
? Changes in purchasers' behaviour can occur for a number of reasons, but the ones, which should not be a surprise, are technology changes, dissatisfaction with your product or service or changes in competitors' behaviour (which you should know or at least anticipate).
? The models may be inaccurate
By analyzing the forecasting process one can avoid the pitfalls that plague many forecasting approaches and strengthen the forecasting process.

Ethical issues
Accounting is the means by which information about an enterprise is communicated and, thus, is sometimes called the language of business. Financial Statements is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources. It is also used to help management to know the performance of organization. The benefit to the of Ethical financial forecasting is that it will help in promoting the transparency and strengthening the relationship with the shareholders and the prospective investors. Some in the industry believe the practice of management offering a picture of how a company may perform in the future helpful.
But there can be misleading earning guidance due to inaccurate or manipulated financial forecasting. Some of the industry professionals believe the practice allows management to use misleading information about future events to prop up stock prices. For example, a company president might indicate earning would be lower than they actually are, so when the numbers come in over the estimate, the stock price may rise. Moreover it may be done to favor market analyst. Market analysts follow major companies and estimate what the earnings number, reported as earnings per share or EPS, will be.

www.about.com/stocks.about.com/od/ whatmovesthemarket/a/earnsea100704.htm

? b. Describe how the Balanced Scorecard can be used to align the organization¿s strategy from general, to grand-strategy, to tactical, to individual operating unit.

The balance scorecard first came to ...

Solution Summary

A. What are some possible challenges and limitations of financial forecasting?

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