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Exercise 3: Business Forecasting
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Attribution
The economic cooperation and read the agreement between India and Australia would lead to a positive impact on the expansion of the business into foreign markets. The reports of ABS have reflected that there has been significant turnover in detail, especially in the category of household goods. As per the views of Das et al. (2022), the ECT agreement between India and Australia would also benefit various label intensive for the industrialisation of India which has relied on the imports of Australia almost by 5%. On the other hand, it has also been forecasted that this agreement has the potential to result in an increase in accessibility in the immediate market at zero duty which has accounted to be 90.3% of the tariff line. Besides that, the value of the demand has been reported to be 96.4% of exports from India to Australia. The data has been attributed from this https://www.abs.gov.au/statistics/industry/retail-and-wholesale-trade/retail-trade-australia/latest-release#data-downloads in order to develop market forecast.
Scope
The "Holt Winter '' model has been used in order to generate forecasting results of the form which would be impacted highly by the ECT agreement between the two nations. According to the thoughts of Kumar et al. (2022) “winter holt” has been considered one of the most influential models of times series behaviour which focuses on the time series such as the impact on the trends over time, cyclical repeating patterns and the average value.
Application
In this forecasting method, a single parameter has been used which is also known as the movie factor. In this same context, Alpha has controlled the overall rate of influence of historical data and observed trends on the declining exponential. Hence 4th the value of the parameter has been set between zero and one. The formula that has been used in the forecasting is “set = αxt+(1 – α) st-1= st-1+ α (xt – st-1)”
[Referred to Appendix-1]
Analysis
Figure 1: Household Goods Retailing
(Source: studocu.com, 2023)
The above figure has provided has abroad scope on the seasonally adjusted before of the “household goods retailing industry” 2019 to 2022 which has been estimated to be 4671.4 million dollars to 577 3.1 million dollars in addition to this seasonally adjusted value of the household goods return industry in 2020 has been reported to be 5990.2 million dollars. Besides that, this sector has also witnessed the highest revenue in 2021 which has been accounted to be 6385.2 million dollars.
Articulation of Issues
The Mean Absolute Deviation is one of the common technical errors which has been identified in the testing of the data while forecasting. The study of Ashraf et al. (2022) has suggested that there is a wide range of factors which have influenced the testing of the data such as types of products, the situation of competition in the industry characteristics of the product demand of the product in a market and number of units manufacturing units in the industry. In this same context, the mean absolute percentage error also occurred while performing the checking of the forecasted results.
Critique
“Simple Exponential Smoothing model” has been used which allows the business organisation to obtain insights and data from time series forecasting. However, in this method of forecasting, the bivariate data also has been involved which was not associated with any of the trends or seasonal trends. As per the remarks of Altig et al. (2022), “Time series methods” also have been performed on the principle of prediction which focuses on treated linear sum from past observations or large. Besides that, this method can be used by assigning exponentially declining weights from the historical data as each demand observation also can be found to be exponentially decreased. On the other hand, the main purpose of exponential smoothing is to make forecasts of time series on the basis of the seasonality of systematic trends. Moreover, it has been found that the firm would achieve the average value of demand after the due to the impact of the economic cooperation and trade agreement. However, the average value of demand can vary over time (Irfan et al. 2023).
Position
Thus, it can be concluded that the agreement would help the firm to secure access to one of the fast-growing Indian markets and also provide an opportunity for trade diversification. In addition to this, India is one of the 7th largest trading partners of Australia and the fifth largest country which has been exporting a wide range of resources such as copper gold and gold. From the exponential smoothing method, it has been found that the firm can achieve significant growth in their sales from the expansion of the business which has been derived from past observations and historical data.
References
- Altig, D., Barrero, J.M., Bloom, N., Davis, S.J., Meyer, B. and Parker, N., 2022. Surveying business uncertainty. Journal of Econometrics, 231(1), pp.282-303.
- Ashraf, R., Khan, M.A., Khuhro, R.A. and Bhatti, Z.A., 2022. Knowledge creation dynamics of technological forecasting and social change special issues. Technological Forecasting and Social Change, 180, p.121663.
- Das, A., Konietzko, J. and Bocken, N., 2022. How do companies measure and forecast environmental impacts when experimenting with circular business models?. Sustainable Production and Consumption, 29, pp.273-285.
- Irfan, D., Tang, X., Narayan, V., Mall, P.K., Srivastava, S. and Saravanan, V., 2022. Prediction of Quality Food Sale in Mart Using the AI-Based TOR Method. Journal of Food Quality, 2022.
- Kumar, S., Sahoo, S., Lim, W.M., Kraus, S. and Bamel, U., 2022. Fuzzy-set qualitative comparative analysis (fsQCA) in business and management research: A contemporary overview. Technological Forecasting and Social Change, 178, p.121599.
