Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.
Now is the time to make a decision about relocating the manufacturing operation to the United States is fast-approaching. AutoEdge, like most companies, uses a strengths, weaknesses, opportunities, and threat (SWOT) analysis to facilitate its decision making.
You have just completed your first monthly activity report for the board when Lester calls.
“Hi,” you say. “I just finished my monthly report for the board. I’ll e-mail it to you when we get done talking.”
“Sounds good,” he says. “I’m calling because we need your expertise again for another facet of our investigation into the manufacturing operation. This time, I want you to conduct a detailed SWOT analysis for AutoEdge, and provide a brief summary of your analysis.”
“I was expecting this,” you say. “Some of the research I’ve done over the past 4 weeks will be useful as I put this analysis together for you.”
“Yes, I thought you were in a good position to do this work,” he says. “Your analysis may be different from other people who have been at the company longer, but your fresh perspective on the components will be helpful in moving the debate forward.”
“That’s a good point,” you say. “I’ll keep that in mind as I go through the information.”
The materials found in the M.U.S.E. may help you with this assignment. Additional information is also provided in the Lessons from Experience series found at the following link:
Lessons From Experience: Forecasting With Numbers
The story that you are about to read is from actual events that occurred in the field. Its purpose is to provide you with a real-world example from a seasoned professional in the business world.
Forecasting With Numbers
Working in the jewelry industry involves forecasting; that is, forecasting which jewelry pieces will be in demand and then determining how many to order.
While working at a jewelry company, one of my tasks was to place orders for various jewelry products for the store. But for me at that time, forecasting meant looking at last year’s orders and then simply copying those numbers. I never gave much thought to why I was ordering what I did; I just did it. As it turned out, my orders were off the mark—not just by a little bit, but by a lot. The store got stuck with a surplus of items that eventually went on clearance for less than what we paid for them, all because I didn’t use a financial model or take into account external factors that could have affected the jewelry items. Today, I implement many financial models and include net present value (NPV) so that I have a better understanding about what I’m ordering, and so I can be more accurate in forecasting.
It is important to take away the following from this scenario:
• Financial models are crucial when forecasting.
• Subjectivity and objectivity are equally important.