Forecasting Methods for Volatile Factors in Budgeting – An Empirical Analysis of Large Austrian Companies

1.       Objective of the Paper

The main objective of this paper is to analyze the forecasting behavior of the large Austrian companies along with the variation that has occurred because of the increase of VUCA in comparison with the pre-crisis situation of the forecast methods that play an integral role in the budgeting of large Austrian companies. The forecasting behavior of the companies has its effect on the progress of the company and also in the growth and expansion. In the financial crises situation that has happened in the year of 2011 and back in 2008, VUCA has decreased the forecasting proficiencies of the companies. This is one of the major challenges that has affected the sustainable corporate management that has a deep relation with the budgeting problems. For this reason, the budget process has been amended on the basis of the quantitative and qualitative forecast methods and this has happened because of the changing trends in the planning factors. These factors have increased the importance of study along with the objectives of the paper. For the better enlightenment of the objectives of the paper, a quantitative online survey has been conducted and in that survey 106 questionnaires were involved for the better evaluation. In this way, the companies that have been surveyed have shown that the financial crises of 2008 have affected them. This is why the large Austrian companies are now using qualitative forecasting methods. The key factors related to the forecasting methods are accuracy of method and flexibility and this paper provides a comprehensive analysis on these factors.

2.       Advanced Techniques and Methods Used in the Computations

In the computations, there are more advanced techniques and methods that are used in these days as compared to the past. There is also another reason that the business environment has changed and now the business trends are changing and more and more large companies are using latest technologies, shifting demographics and working in accordance with the challenges that they have. In the past few years, the whole scenario has changed and this is mostly due to the financial crises that have increased the uncertainty in the business world. The financial crises of 2008 and 2011 have affected the finance markets, procurement and also the variations in the sales. So in order to deal with the modern challenges there are more advanced techniques that are developed today along with the methods that are used in the computations. The companies have also organized their systems in accordance with the latest trends and techniques. VUCA (volatility, uncertainty, complexity and ambiguity) is the main factor in the modern business environment that can change the outcomes and results of a business. By using the advanced techniques and methods along with the huge planning resources companies have still some issues in the budgeting process and here the main problem is the forecasting that is affecting the business conditions. This is because the forecast is the integral part of the budgeting process, but the forecast functionality depends on the internal and external planning factors. This is why the large Austrian companies are working on the internal and external planning factors for the better future and business. Advanced Techniques and methods used in the computations have their role in the changing directions of the business. This is why by using the forecast methods the external and internal planning factors should be briefly described by using the forecast methods. This is essential before the expansion of the business and also while making a business plan for the future. There are many principles that can be used to develop the strong forecast methodologies. There is a huge change in the practices of the forecast management in the last two decades. This study provides a detailed analysis of these factors by conducting a survey that can examine the forecast techniques, accuracy of forecast and its usage, methods, systems and the level of satisfaction. There is a lack of expertise in the forecasting techniques and, for this reason, this paper focuses on the forecasting methods of the large Austrian companies.

3.       Results and Conclusion Described in the Paper

The main objective of this paper was to study and analyze whether the VUCA and the financial crises has changed the forecast method. The next thing was to develop a quantitative research design and a comprehensive review has been discussed.  In this way focusing on the research objectives, the survey has been conducted and a large number of Austrian companies have participated. The results have been analyzed in accordance with the literature review. The forecast methods in the Austrian companies have also been discussed and analyzed. The results have showed the unsuccessful forecast is due to the inefficient resourcing, lack of advanced techniques and methods used in the computations (IT) and unsuitable forecast methods. Most of the large Austrian companies uses qualitative forecasting methods and even opinions of single experts that are unsuitable according to the nature of the business. There is a need to use the quantitative method and the results in the report shows that the usage of flexible forecasting methods along with the accuracy of method are the best tools that can prove to be more efficient. In this report the forecast methods of SMEs have also been analyzed with a detailed picture of the forecasting methods in the Austrian companies and this study also focuses on the uncertainty and the increasing volatility that has affected the forecasting behavior in comparison with the pre-crises time.