Able Corporation: Forecasting in the Portable Electric Power Tools Industry
Once Able has identified internal issues, the company must begin to look to external issues to be able to form an identity through a mission statement, implement a value proposition and set strategic operations. In order to do this, the company can look at economic indices to help with forecasting.
"There are four direct general economic indices that are used to forecast the sales of the PEPT (Portable Electric Power Tools) Industry in which Able Corporation operates. These are housing starts, expenditures for residential construction, expenditures for commercial construction, and expenditures for home repairs and improvement." (Task List, n.d.) These indices are in direct correlation of each other; if interest rates are high then residential construction expenditures are low and home repairs and expenditures are high as homeowners repair their current house rather than buy a new one. Examining the external environment can give Able an idea of how to operate and forecast properly.
One good source to look at economic indices is the Census website. There, the Able Corporation can look at how the key general economic indices correlate with each other for the last five years listed. The first economic index to examine is housing starts. In 2003, the total amount of privately owned houses to start in that year was 1,499. In 2004, this amount was 1,611. In 2005 the amount of housing starts was 1,716; in 2006 housing starts were noted at 1,465. In 2007, the amount of housing starts was 1,046 (New Privately Owned Housing Units Started, 2008).
Examining construction expenditures for residential homes are also key. In 2003, there was $ 705,276,000 worth of residential construction put into place. In 2004, this number rose to $ 803,305,000. In 2005, this number rose again to $ 897,989,000. The amount of residential construction expenditures rose again to $ 939,553,000 in 2006. In 2007, however, the amount of residential construction expenditures dropped to $
"There are four direct general economic indices that are used to forecast the sales of the PEPT (Portable Electric Power Tools) Industry in which Able Corporation operates. These are housing starts, expenditures for residential construction, expenditures for commercial construction, and expenditures for home repairs and improvement." (Task List, n.d.) These indices are in direct correlation of each other; if interest rates are high then residential construction expenditures are low and home repairs and expenditures are high as homeowners repair their current house rather than buy a new one. Examining the external environment can give Able an idea of how to operate and forecast properly.
One good source to look at economic indices is the Census website. There, the Able Corporation can look at how the key general economic indices correlate with each other for the last five years listed. The first economic index to examine is housing starts. In 2003, the total amount of privately owned houses to start in that year was 1,499. In 2004, this amount was 1,611. In 2005 the amount of housing starts was 1,716; in 2006 housing starts were noted at 1,465. In 2007, the amount of housing starts was 1,046 (New Privately Owned Housing Units Started, 2008).
Examining construction expenditures for residential homes are also key. In 2003, there was $ 705,276,000 worth of residential construction put into place. In 2004, this number rose to $ 803,305,000. In 2005, this number rose again to $ 897,989,000. The amount of residential construction expenditures rose again to $ 939,553,000 in 2006. In 2007, however, the amount of residential construction expenditures dropped to $
References: Coulter, M. (2008). Strategic Management in Action (4th ed). Upper Saddle River, NJ: Pearson Prentice Hall. Task List. Retrieved November 23, 2008, from Colorado Technical University Online Web site: http://MainFrame.aspx?ContentFrame=/Default.aspx. US Census Bureau. (2008). Annual Value of Construction Put in Place. Retrieved November 23, 2008 from US Census Bureau Web site: http://www.census.gov/const/C30/ototal.pdf. US Census Bureau. (2008). Annual Value of Private Construction Put in Place. Retrieved November 23, 2008 from US Census Bureau Web site: http://www.census.gov/const/C30/oprivate.pdf. U.S. Census Bureau. (2008) Expenditures for Residential Improvements and Repairs by Property Type, Retrieved November 23, 2008, from US Census Bureau Web site: http://www.census.gov/const/C50/histtab2new.pdf. U.S. Census Bureau. (2008). New Privately Owned Housing Units Started in the United States by Purpose and Design. Retrieved November 23, 2008 from US Census Bureau Web site: http://www.census.gov/const/www/quarterly_starts_completions.pdf.