An assessment of market and macro factors that affect forecasting in fast moving consumer goods companies – a case study of Glaxosmithkline
Haria, Binita Rishi
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Forecasting creates an estimation of future demand. Forecasting enables businesses to survive and companies to compete in today’s market, by coming up with new advantages, as global competition grows stronger. Despite the vitality of forecasting, GlaxoSmithKline is facing forecasting–related challenges, whereby even after forecasting demand and supply, and reviewing on a monthly basis, a shortfall is experienced month on month and hence consumer dissatisfaction. The purpose of this study was to assess the market and macro factors that affect forecasting in GlaxoSmithKline. The specific objectives were to assess the effects of different market factors and macro factors on forecasting at GSK. Cross sectional research design was used with the population as employees of GSK who are directly involved in product forecasting. The population included production planning team members, sales, marketing team members; demand forecasting team members and the distribution team of GSK. Data collection involved the use of a structured questionnaire which was administered to the respondents by the researcher. Both descriptive and inferential statistics were used for data analysis. The reliability tests of the research instrument were carried out and the overall Cronbach’s alpha for market factors which were the independent factor was (0.894), macro factors which were the intervening factor was (0.921) –and accurate market forecasting which was the dependant variable was at (0.943). The findings of the study were that macro factors significantly impacted forecasting at GSK. Market factors impacted on forecasting in GSK, though not rated as highly as macro factors. The study concluded that macro factors like the political indicators, consumer’s purchasing power, seasons, promotions, holidays and festivals greatly impacted on forecasting at GSK. The study also concluded that the methods GSK uses to make up for inaccuracies included the use of historic data and reviewing the forecast to cater for the changing trends. The recommendations of the study were that GSK should assess the various political actions that may affect the future forecasting of products. For accuracy in forecasting, GSK should consider the impacts of consumers buying behaviour, competition from similar products, availability of cheaper substitutes, recency effects and consumer purchase power. An area for further research was need for a study on the effectiveness of the forecasting team in undertaking accurate forecasting of products at GSK.