The largest online retailer in the world
The largest online retailer in the world right now is Amazon Inc. The business provides a platform where buyers and sellers can communicate.
Precise projection of future demand
A precise projection of future demand for the company's services is essential to the business strategy's success. To accurately estimate market trends, the business uses a subjective forecasting methodology. By using a subjective approach, Amazon has been able to respond to quick market shifts such as unforeseen economic shocks, like the recent terror incidents that affected the majority of its markets in various regions of the United States (Drandell, 2012).
The dilemma of using past information
Forecasting involves the use of past information to make a proper decision pertaining the future, Amazon’s manager in the past has been faced with the dilemma of how and whether to use the past to predict the future operations (Griffith & Krampf, 2014).
The difference between prediction and forecasting
The subjective approach has established the difference between the prediction and forecasting from the initial perception of the organization. The prediction requires application of experience and subjective judgment in future estimations while forecasting is the extrapolations of past events into future using scientific techniques. With this awareness in mind, managers understand the relationship between the resource decision and forecasting to be more resourceful plans for long-term decisions.
Qualitative models and the subjective approach
According to Levary & Han (2016), ability to make a good forecast depends on qualitative models such as subjective approach. For instance, estimation of future demand for Amazon's services in terms of the sales and the quantities of products has been realized through the subjective approach. Through this technique, it has been possible to estimate the forecast or future changes in sales by Amazon through taking into consideration the ideas and experiences of the salesperson with the buyers in the market and using the subjective judgment to refine the anticipations (Levary & Han, 2016).
References
Drandell, M. (2012). A composite forecasting methodology for manpower planning utilizing
objective and subjective criteria. Academy of Management Journal, 18(3), 510-519.
Retrieved from http://amj.aom.org/content/18/3/510.short
Griffith, D. A., & Krampf, R. F. (2014). An examination of the Web-based strategies of the top 100 US retailers. Journal of Marketing Theory and Practice, 6(3), 12-23. Retrieved from http://www.tandfonline.com/doi/abs/10.1080/10696679.1998.11501801
Levary, R. R., & Han, D. (2016). Choosing a technological forecasting method. Industrial
Management-Chicago Then Atlanta-, 37, 14-14.
Retrieved from https://muse.jhu.edu/article/644609/summary
