Analysis Of Malcolm Londons Speech - 854 Words

In todays modern era, African American students are almost designed to fail America’s public school system. However, TED talks’ Malcolm London not only is not only one of many examples that excelled in a failed system, but also conquered it. His feisty, passionate performance take on the issues of American education system. Since school is lacking the unique aspects of humans and school is meant for competition, thus school is set up for failure; London develops a persona with audience to convince them high school is a training ground. Once the video starts, London choses to start the beginning of his speech while in the back of the crowd, rather than on stage. From the beginning, London shows he is a part of the people, rather than†¦show more content†¦When London states â€Å"but you have to step on someone else to get there† This emphasizes the idea that not only him, but many others, different and just like him have felt that in the American education system, â€Å"raises you but you have to step on someone else to get there†. Public school is meant for competition, rather than what we as a nation believes should be ‘a more perfect union’ London does not say in detail what he means by the phrase â€Å"to get there†. London instead lets the audience, and the viewer decide what ‘there’ is perhaps its a good grade in the classroom, or perhaps the courage to confront your crush, maybe even to improve your life one way or another. ‘There’ London then takes inspiration from the quote by Mark Twain:‘I will not let my schooling interfere with my education’, already came with the idea of school is set up for failure. London states â€Å"Homework is stressful, but when you go home every day and your home is work, you dont want to pick up any assignments.† Many students, both at the high school and at the college level, often have many out of school activities to attend to, such as family, jobs, and other personal interest. London’s increase in pace also emphasizes that importance of â€Å"your home is work† should not be taken lightly. LondonShow MoreRelatedExploring Corporate Strategy - Case164366 Words   |  658 Pagesmain issues inï ¬â€šuencing the competitive position of a number of organisations in the same industry with a relatively short case. For a case that permits a more comprehensive industry analysis The Pharmaceutical Industry could be used. However, if the purpose is more focused – illustrating the use of ‘ï ¬ ve forces’ analysis – the TUI case study or Illustration 2.3 on The Steel Industry could be used. Some cases are written entirely from published sources but most have been prepared in cooperation with

Case Tools And Agile Systems - 1663 Words

Heritage Interactive System was created using a form of Agile Methodologies in that frequent feedback was needed from the Software Users to ensure the finished product would meet the needs of the Organization, and Customer. We are still using this methodology in modifying the system to keep up with the needs of our Customers, and internal processes. What was needed 4 years ago, when I began working at this Organization has been re-modeled several times, based on the needs of our industry and meeting our Customers’ needs along with the increase volume of information. There are several software development methodologies available when creating, and/or revising all Software Programs. In this paper, I am going to discuss CASE Tools and Agile†¦show more content†¦During the experiment Taskware was held constant as the Macintosh and PC based CASE tools were developed to be used by Teams. The CASE tools evaluated were Deft 4.0, Iconix 4.0., System Architech 2, and Visibly An alysis 3.0. 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Legal Aspects of Oil and Gas Management

Question: Critically evaluate the significance of an Arbitration Clause in the context of an Oil Gas contract. Comment on its value as far as dispute resolution is concerned. Answer: Introduction The search for oil is paramount, exploration and production of oil and gas have led to the rise of both worldwide and transnational petroleum firms. As every industry around the world work under some rules and regulations, it is evident that the oil and gas industry are working according to laws(Williams Meyers, 2010). Rules cover various aspects of oil industry vacillating from licensing, joint ventures, projects and service contracts, construction and so on. Even though each country has its specific laws, international petroleum laws apply to any firm in any nation. This paper transcends how substantive rules of the international law apply to the oil and gas industry across the world. Also, it will evaluate fundamental principles of contract formation and key international principles and trends in the oil and gas sector. Additionally, it will review how effective international laws are placed upon the oil and gas industry to address the environmental impact of oil exploration and exploitation. Lastly, a critical analysis of the importance of oil and gas law as a distinct subject studied in real-world and commercial context. International Law and Oil and Gas industry To begin with the IOGP (International Association of Oil and Gas Producers), in recent years have played a major part in developing the respective industry regarding adhering to environmental liability, financial reporting and transparency within the industry(IOGP, 2013). It stipulates that organizations or firms that are involved in this type of industry should comply with the international requirements to meet the oil and gas management standards. One of the relevant international law id the environmental law and policies involved in energy and natural resources. This policy or law states that every industry must use and produce products that are not harmful to the public or the environment as a whole. Also, industries in the oil and gas industries must not deplete all the resources available on the verge to look for their raw materials. Additionally, a perfect example of international law that relates to the oil and gas industry is The International and The Comparative Petroleum L aw and Policies. The law integrates the oil company, the host government, and the investors. The explains the openness of the financial investor and the international corporate(IOGP, 2013). Secondly, sovereignty refers to the to the privileges a country id given to control its populace within its boundaries(Ghandi Lin, 2010). It is evident that most of the resources are owned privately or publicly in a specified industry. The international law identifies the principle of sovereignty. Even though the international law recognizes it, sovereignty does not give one the power to go against the international laws and regulations as required by an oil and gas company. Additionally, many oil and gas industry producers are bounded by others businesses through the treaties and convention that are formed under the international law. Some of the best legally binding agreements are the Vienna Convention on the law of treaties and the United Nations on Contracts if International Sale of Goods. (CISG). The CISG have rules and regulations that involve the formation of contracts and contractual preparations that are identical to Unified Commercial Code used in the United States. Other notable conventions that affect the oil and gas industry include The 1970 Hague Evidence Convention that was focused on giving individuals new methods and techniques of gathering and discovering evidence. Arbitration Clause and the Oil and Gas Industry Arbitration can be referred to a special form of obligatory dispute tenacity steered by an unbiased tribunal, which was instigated from the treaty of the parties but is delimited by a nation or state. It is evident that oil and gas industry involves multifaceted, expensive and risky operations which frequently last for a period(Berlin, 2004). Individual contracts must be regulated in the parties engaged in any oil and gas industry transactions since disputes may arise from the agreement. Issues that may occur in the oil and gas sector that concerns contracts and agreements include claims over jurisdiction, equipment-related claims, quality and quantity of goods, insurance issues and so on and so forth. These disputes are inevitable in a long run, and international petroleum transaction is no exemption. Most of the contractual disagreements in the oil and gas industry use a preferred method of arbitration due to its neutrality characteristic, non-adversarial techniques of dispute resolution and cost-effectiveness of arbitration process(Maniruzzaman, 2009). First, the vital consideration when it comes to the settlement of disputes depends on the following choices of law, forum and the predetermined dispute resolution requirements. To begin with, there must be a substantive law that applies to a given transaction focused on contract remedies, performance, and interpretation. Secondly, the choice of forum is essential as it allows to select a precise group or court that can hear the disagreement between any contractual dispute between two oil and gas firms. This choice must be valid in the sense that it does not favor any party in the dispute. After the above considerations are made. Conflict resolution can either take the form of litigation or arbitration. As mentioned earlier, oil and gas firms prefer arbitration to ligation as litigation takes a long time and it might be costly(Joff, et al., 2009). In universal negotiation or arbotration, the two oil companies may consent to either ad hoc or any other established arbitration. The Ad Hoc comprises of arbitration procedures picked by the parties involved as per commonly settled upon tenets and methodology. This kind of mediation necessitates that, both must accept obligations of regulating as well as arranging the entire arbitration deprived of the regulation of a built up foundation. Parties involved can particularly situate and embrace the arbitration guidelines for different affiliations. The UNCITRAL (United Nations Commission on International Trade Law) set up arbitration decides shorn of an organization which administers all procedures so that the parties involved c an either utilize the UNCITRAL rules individually with the appointed systems or require the foundation connected such principles. In arbitration, there is no value regulator in terms of quality, and oversight through any legitimate organization. Although, Ad hocs arbitral grants are likewise enforceable underneath the identical laws talked about next, and are seen by all. International tribunals might probably mediate than if the intervention were before a setup foundation. In global petroleum exchanges, parties all the more frequently pick or fall back on established arbitration beforehand somewhat an of the numerous open and private establishments. The most perceived and regarded organizations are the ICC (International Chamber of Commerce), ICSID (International Center for the Settlement of International Disputes, AAA (American Arbitration Association, and the LCIA (London Court of International Arbitration) . Even though there are uncountable numbers of other local, nearby and industry-specific arbitration mediums, these organizations give a current discussion permitting parties to determine clashes under set up standards and methodology before referees skilled at applying the universal law and comprehension of distinctive legitimate frameworks. The United Nations general assembly embraced the model law on International Commercial Arbitration (ICA) drafted by the UNCITRAL. The model law was formulated to outline a uniform and customary arbitration laws around the world with the goal of determining the numerous inborn clashes amongst different nationwide intervention laws. The UNCITRAL model type of mediation law, is mostly used to serve any premise for some federal intervention decrees all through the world and notwithstanding any state legislation in the US. Up until the main part of country entirely received UNCITRAL model law on arbitration, there will be contrasts between the countries through applying and deciphering the arbitration rules picked by both parties or the principles of a specific organization(Sanders, 2005). A genuine procedure in handling mediation differs relying on the arbitrations provisions incorporated into a certain agreement, and the tenets and methods proclaimed by any arbitrational establishment picked. Whether an arbitration is occupied with the two types of arbitration, mostly chosen by Oil and gas industry, each firm involved are obligated to resolve several bureaucratic issues, as well as determination of authorities, the judges, dialect utilized as a part of the arbitral procedures, and methods employed in revelation and certainty assembly. Institutional arbitration is condemned since it has gone up against superior qualities of prosecution, turning out to be unreasonable and tedious, and certain arbitration affiliations might not give mastery and sectorial learning an adequate to determine question concerning complex international petroleum exchanges. Progressively, parties have looked to different types of ADR to determine their debate in less formal situations that suit speedier determination and foster proceeded with business connections(Nolan-Haley, 2013). Before prosecuting or parleying a debate, numerous parties pick intervention, appeasement, ministerial and other pre-arbitral and pre-litigation options. In universal arbitration, a public option amongst any of the Eastern societies, has an official procedure in which both oil firms present their debate, commonly settled upon an outside, particular intervention or Arbitration Dispute Response Association picked by the firms. Different worldwide relationships have built up the general procedural tenets for intercession, including the UNCITRAL, ICC, and the CAMCA (Commercial Arbitration and Mediation Center for the Americas). Placation is viewed as a less formal other option to intervention and, dissimilar to intercession, is utilized less with the end goal of acquiring an eventual settlement and assertion between the parties, and more with the ultimate purpose of keeping up a correspondence between the parties. Like intercession, general procedural rules have been declared by differen t universal associations (e.g., the ICC Rules of Optional Conciliation) which are intended to help the assuagement procedure and guarantee absence of bias, value, and equity(Moens Sharma, 2013) Supplementary non-binding Arbitration Dispute Response options incorporate the utilization of pre-arbitral officials and initials, which permit independent parties to limit the issues and survey the actualities and law administering their debate and gives the parties a fair-minded perspective of their individual qualities and shortcomings. There are various ADR focuses all through the world and offered by different global associations. Options are less inclined to be drafted into worldwide petroleum contracts, however, are progressively well known to abstain from starting the long and restricting strategies for intervention and suit(Gouldson, et al., 2015). International law and the Environmental Impact The international laws have come up with about 70 conventions the oil and gas industry must follow up to preserve the environment. According to (IOGP, 2016), international and regional frameworks have been put in place to manage the oil and gas industry environmentally. Additionally, there are operational practices and procedures which are being implemented on the site. Such operational considerations include pollution prevention and a cleaner production of oil, waste management and disposal techniques and formulation of an oil spill contingency plan. If the firms in this industry follow up such stipulations as required by these conventions that are focused on creating a better environment, then oil and gas industry will be able to produce an ecologically approachable product that does not cause chaos or pollution to the environment. Importance of Oil and Gas Law Truth be told, oil meets 97% of the UK transport division request. Moreover, it additionally advantages our lives in being imperative to the creation of numerous ordinary essentials(Yusuf, et al., 2013). Oil's refined items are utilized to fabricate every substance item, for example, plastics, manures, cleansers, paints and even meds, in addition to an entire host of different items that you will not anticipate. The oil and gas law is essential in our day to day lives in that it regulates all these producers of oil and gas products and regulates the trade in the oil and gas industry. Additionally, the oil and gas law has been essential not only in one country but in several nations across the world that are focused on improving the environment and fighting off the Green House effect(Chu Majumdar, 2012). Conclusion It is significant to note that oil and gas industry is primarily affected by the international laws. Also, as a fast-growing company and investors are cashing in a lump sum of many it has become contractual and there are disputes in the business activities that run daily in the industry. Oil and gas sector prefer the arbitration rather than ligation due to its neutrality characteristic. Also, it is important to note that arbitration is the most used method of solving any contractual disagreement in this type of industry. Merchants do not want to waste time, the need to focus on the next delivery. Hence arbitration suits best. Additionally, the international law has stipulated conventions that regulate the exploitation and production of oil and gas. Lastly, the oil and gas are essential for controlling and guarding customers against the malpractices from the dealers in the industry. Bibliography Berlin, A., 2004. Managing political risk in the oil and gas industries.. Transnational Dispute Management (TDM), 1(1), pp. 1-70. Chu, S. Majumdar, A., 2012. Opportunities and Challenges for a Sustainable Energy Future. Nature, 488(7411), pp. 294-303. Ghandi, A. Lin, C., 2010. Oil and Gas Service Contracts Around the World: A Review. Energy Strategy Reviews, 3(1), pp. 63-71. Gouldson, A., Carpenter, A. Afionis, S., 2015. Environmental Leadership? Comparing Regulatory Outcomes and Industrial Performance in the United States and the European Union. Journal of Cleaner Production, Volume 100, pp. 278-285. Haghighi, S. S. (., 2007. Energy Security: The External Legal Relations of the European Union with Major Oil and Gas Supplying Countries. s.l.:Bloomsbury Publishing. IOGP, 2013. International Association of Oil and Gas Producers. [Online] Available at: https://www.iogp.org/Policy-and-issues#4332728-international-law-and-trade [Accessed 29 July 2016]. IOGP, 2016. International Association of Oil and Gas Producers. [Online] Available at: https://www.ogp.org.uk/pubs/254.pdf [Accessed 29 July 2016]. Joff, G. et al., 2009. Expropriation of Oil and Gas Investments: Historical, Legal and Economic Perspectives in a New Age of Resource Nationalism. The Journal of World Energy Law Business, 2(1), pp. 3-23. Linde, P. H., Baram, M. Renn, O. eds., 2013. Risk Governance of Offshore Oil and Gas Operations.. s.l.:Cambridge University Press. Maniruzzaman, A., 2009. Issue of Resource Nationalism: Risk Engineering and Dispute Management in the Oil and Gas Industry. Tex. J. Oil Gas Energy L, Volume 5, p. 79. Miccioli, G., 2013. International Commercial Arbitration. s.l.:ASIL.. Moens, G. A. Sharma, R., 2013. The CEAC Hamburg arbitration rules: A European-Chinese trade-related adaptation of the revised UNCITRAL Arbitration Rules 2010.. Arbitration: The International Journal of Arbitration, Mediation and Dispute management.. Nolan-Haley, J., 2013. Alternative Dispute Resolution in a Nutshell. 4th ed. Minnesotta: West Academic. Sanders, P., 2005. UNCITRAL's Model Law on International and Commercial Arbitration: Present Situation and Future. Arbitration International, 21(4), pp. 443-482. Williams, H. Meyers, C., 2010. Oil and Gas Law. s.l.:M. Bender. Yusuf, Y. Y. et al., 2013. The UK Oil and Gas Supply Chains: An Empirical Analysis of Adoption of Sustainable Measures and Performance Outcomes. International Journal of Production Economics,, 146(2), pp. 501-514.

Four Steps to Forecast Total Market Demand Essay Example For Students

Four Steps to Forecast Total Market Demand Essay Four Steps to Forecast Total Market Demand F. William Barnett Harvard Business Review No. 88401 HBR JULY–AUGUST 1988 Four Steps to Forecast Total Market Demand F. William Barnett Recent history is filled with stories of companies and sometimes even entire industries that have made grave strategic errors because of inaccurate industrywide demand forecasts. For example: ? In 1974, U. S. electric utilities made plans to double generating capacity by the mid-1980s based on forecasts of a 7% annual growth in demand. Such forecasts are crucial since companies must begin building new generating plants five to ten years before they are to come on line. But during the 1975–1985 period, load actually grew at only a 2% rate. Despite the postponement or cancellation of many projects, the excess generating capacity has hurt the industry financial situation and led to higher customer rates. ? The petroleum industry invested $500 billion worldwide in 1980 and 1981 because it expected oil prices to rise 50% by 1985. The estimate was based on forecasts that the market would grow from 52 million barrels of oil a day in 1979 to 60 million barrels in 1985. Instead, demand had fallen to 46 million barrels by 1985. Prices collapsed, creating huge losses in drilling, production, refining, and shipping investments. Bill Barnett is a principal in the Atlanta office of McKinsey Company. He is a leader of the firm’s Microeconomics Center, and his client work has focused on business unit and corporate strategy. ? In 1983 and 1984, 67 new types of business personal computers were introduced to the U. S. market, and most companies were expecting explosive growth. One industry forecasting service projected an installed base of 27 million units by 1988; another predicted 28 million units by 1987. In fact, only 15 million units had been shipped by 1986. By then, many manufacturers had abandoned the PC market or gone out of business altogether. The inaccurate suppositions did not stem from a lack of forecasting techniques; regression analysis, historical trend smoothing, and others were available to all the players. Instead, they shared a mistaken fundamental assumption: that relationships driving demand in the past would continue unaltered. The companies didn’t foresee changes in end-user behavior or understand their market’s saturation point. None realized that history can be an unreliable guide as domestic economies become more international, new technologies emerge, and industries evolve. As a result of changes like these, many managers have come to distrust traditional techniques. Some even throw up their hands and assume that business planning must proceed without good demand forecasts. I disagree. It is possible to develop valuable insights into future market conditions and demand levels based on a deep understanding of the forces behind total-market demand. These insights can Copyright 1988 by the President and Fellows of Harvard College. All rights reserved. sometimes make the difference between a winning strategy and one that flounders. A forecast of total-market demand won’t guarantee a successful strategy. But without it, decisions on investment, marketing support, and other resource allocations will be based on hidden, unconscious assumptions about industrywide requirements, and they’ll often be wrong. By gauging total-market demand explicitly, you have a better chance of controlling your company’s destiny. Merely going through the process has merit for a management team. Instead of just coming out with pat answers, numbers, and targets, the team is forced to rethink the competitive environment. Total-market forecasting is only the first stage in creating a strategy. When you’ve finished your forecast, you’re not done with the planning process by any means. There are four steps in any total-market forecast: 1. Define the market. 2. Divide total industry demand into its main components. 3. Forecast the drivers of demand in each segment and project how they are likely to change. . Conduct sensitivity analyses to understand the most critical assumptions and to gauge risks to the baseline forecast. Defining the Market At the outset, it’s best to be overly inclusive in defining the total market. Define it broadly enough to include all potential end users so that you can both identify the appropriate drivers of demand and reduce the risk of surprise product substitutions. The factors that drive forecasts of total-market size differ markedly from those that determine a particular product’s market share or product-category share. For example, total-market demand for office telecommunications products nationally depends in part on the number of people in offices and their needs and habits, while total demand for PBX systems depends on how they compare on price and benefits with substitute products like the local telephone company’s central office switching service. Beyond this, demand for a particular PBX is a function of price and benefit comparisons with other PBXs. In defining the market, an understanding of product substitution is critical. Customers might behave differently if the price or performance of potential substitute products changes. One company studying total demand for industrial paper tubes had to consider closely related uses of metal and plastic tubes 4 to prevent customer switching among tubes from biasing the results. Understand, too, that a completely new product could displace one that hitherto had comprised the entire market—like the electronic calculator, which eliminated the slide rule. For a while after ATT’s divestiture, the Bell telephone companies continued to forecast volume of long-distance calls by using historical trend lines of their revenues—as if they were still part of a monopoly. Naturally, these forecasts grew more inaccurate with time as end users were presented with new choices. The companies are now broadening their market definitions to take account of heightened competition from other longdistance carriers. There are several ways you can make sure you include all important substitute products (both current and potential). From interviews with industrial customers you can learn about substitutes they are studying or about product usage patterns that imply future switching opportunities. Moreover, market research can lead to insights about consumer products. Speaking with experts in the relevant technologies or reviewing technological literature can help you identify potential developments that could threaten your industry. Finally, careful quantification of the economic value of alternative products to different customers can yield deep insights into potential switching behavior—for example, how oil price movements would affect plastics prices, which in turn would affect plastic products’ ability to substitute for metal or paper. Analyses like these can lead to the construction of industry demand curves—graphs representing the relationship between price and volume. With an appropriate definition, the total-industry demand curves will often be steeper than demand curves for individual products in the industry. Consumers, for example, are far more likely to switch from Maxwell House to Folgers coffee if Maxwell House’s prices increase than they are to stop buying coffee if all coffee prices rise. In some cases, managers can make quick judgments about market definition. In other cases, they’ll have to give their market considerable thought and analysis. A total-market forecast may not be critical to business strategy if market definition is very difficult or the products under study have small market shares. Instead, your principal challenge may be to understand product substitution and competitiveness. One company analyzed the potential market for new consumer food cans, and it concluded that growth trends in food product markets were not critical to the strategy question. What was critical was knowing the value positions of the new packages HARVARD BUSINESS REVIEW July–August 1988 elative to metal cans, glass jars, and composite cans. So the company spent time on that subject. Dividing Demand into Component Parts The second step in forecasting is to divide total demand into its main components for separate analysis. There are two criteria to keep in mind when choosing segments: make each category small and homogeneous enough so that the drivers of demand will apply consistently across its various elements; make each large enough so that the analysis will be worth the effort. Of course, this is a matter of judgment. You may find it useful in aking this judgment to imagine alternative segmentations (based on enduse customer groups, for example, or type of purchase). Then hypothesize their key drivers of demand (discussed later) and decide how much detail is required to capture the true situation. As the assessment continues, managers can return to this stage and reexamine whether the initial decisions still stand up. Managers may wish to use a ‘‘tree’’ diagram like the accompanying one constructed by a management team in 1985 to study demand for paper. In this disguised example, industry data permitted the division of demand into 12 end-use categories. Cause for Vegetarianism EssayPlain Paper Copier Use/Level of Economic Performance (tons per trillions of dollars) 1978 1982 1986 Nonimpact Page-Printer Use (millions of tons) CAGR 30% CAGR 3% 1978 1982 1986 1978 1982 1986 CAGR = Compound Annual Growth Rate 1978 1982 1986 Knowing the drivers of demand is crucial to the success of any total-market demand forecast. In 1974, as I mentioned earlier, most electric utilities used an incomplete total-demand forecast to predict robust demand growth. In the early 1980s, one company’s management team, however, decided to study potential changes in end-user demand as well. The team divided electricity demand into the three traditional categories: residential, commercial, and industrial. It then profiled differences in residential demand because of more efficiency in home appliances and changes in home size and the ratio of multi-unit to single-family dwellings. Industrial demand was analyzed by evaluating the future of several key consuming industries, paying special attention to changes in their total production and electricity use. This end-use approach sharply reduced the utility’s initial forecasts and led to cancellation of two $700 million generating plants then in the planning stage. In 1983, forecasters in the U. S. personal computer HARVARD BUSINESS REVIEW July–August 1988 industry were saying that demand would continue to rise at a rapid rate because there were 50 million white-collar workers and only 8 million installed PCs. One company, however, did a more detailed demand forecast that showed that growth would soon flatten out. It found that more than twothirds of white-collar workers either did not require PCs in their jobs—actors and elevator operators, for instance—or were supported mostly by inexpensive terminals linked to large computers, as in the case of many clerical workers. The potential market was not big enough to support the growth rate. Indeed, the market began to flatten the next year. Forecasting total demand became crucial for another company that was thinking about acquiring a maker of video games. Many thought that low overall market penetration (10% of U. S. households) signified a lot of room for growth before the market became saturated, when about 50% of the households would have games. Using available data, however, the management team created categories 7 Understanding Copy Paper Demand Drivers Copy Cost Comparison: 1972 Dollars 0 10 9 8 Cents per Copy Copy Paper Demand 10 Reduced Paper Cost Savings in Clerical Time Reduced Consumables Cost (e. g. , Toner) 9 8 Cents per Copy 7 6 5 4 3 2 1 0 1975 Total Cost 1 Cost of Paper 7 6 5 4 3 2 Savings in Equipment Depreciation 2 1 1 0 Tons per Billions of Dollars Real GNP 1985 Total Cost based on family income and children’s ages. The analysis made clear that the main target market, upper-in come families with children, was already well penetrated. Families with incomes exceeding $50,000 and children between the ages of 6 and 15 already were 75% penetrated. This finding convinced management that demand would fall and that the proposed acquisition did not make sense. The dramatic decline in video game sales shortly thereafter confirmed the wisdom of this judgment. Conducting Sensitivity Analyses Managers who rely on single-point demand forecasts run dangerous risks. Some of the macroeconomic variables behind the forecasts could be wrong. Despite the best analysis, moreover, the assumptions behind the other demand drivers could also be wrong, especially if discontinuities loom on the horizon. Imaginative marketers who ask questions like ‘‘What things could cause this forecast to change dramatically? ’’ produce the best estimates. They are more likely to identify potential risks and discontinuities—developments in competing technologies, in customer industry competitiveness, in supplier cost structures—than those who do not. So once a baseline forecast is complete, the challenge is to determine how far it could be off target. At one level, such a sensitivity analysis can be 8 done by simply varying assumptions and quantifying their impact on demand. But a more targeted approach usually provides better insight. Begin such an analysis by thinking through and quantifying the areas of greatest strategic risk. One company’s strategy decision may be affected only if demand is well below the baseline forecast; in another case, big risks may result from small forecasting errors. Next, gauge the likelihood of such a development. In the white paper example, the baseline forecast called for continued market growth, though below historical levels. In any particular year, demand could fluctuate with the economy, but the critical question was whether demand would at some point begin a long decline. If so, the companion supplycurve analysis indicated that prices would probably fall dramatically. The team created two scenarios of a gradual decline, one based largely on changes in the economy and the other on changes in assumed end-use trends. These scenarios showed what would make demand fall (e. g. , different rates of decline in copier prices) and thereby provided a basis for evaluating the likelihood of a downturn. Determining an Appropriate Effort The forecasting framework outlined above can work for both comprehensive and simple assessHARVARD BUSINESS REVIEW July–August 1988 ents, but there are different ways to carry out these analyses. A big challenge in demand forecasting (just as with other types of market analysis) is to gauge the appropriate effort for the project’s purpose. It’s useful to ask: ‘‘How much do I need to know to make the decision at hand? ’’ Managers can invest a lot of time in such analyses—the paper example took about 8 man-weeks and the large-scale electricity forecast about 14 manweeks. Some companies have forecasting departments who work year-round on these subjects. The more thorough, though time-consuming, approach generates greater confidence, and the effort will be appropriate where the demand projection can significantly influence corporate strategy (whether to make a several hundred million dollar capital investment, for example), or where there is great uncertainty about total demand. Often, however, the issues are not complicated, time is limited, or the total demand forecast is not important enough to merit that commitment (for example, the company is looking to add a couple of points to its small market share). In such cases, managers should proceed quickly and inexpensively. They can, for example, rely on experts’ judgment or unsophisticated regressions to forecast drivers of demand. Even the limited approaches can yield insights. Furthermore, beginning the demand analysis process can help managers determine whether important demand issues exist that should be analyzed in greater depth. Total-demand forecasting can be important to strategy decisions. Developing independent forecasts through the four-step framework I’ve outlined will not only lead to better recommendations but also help build conviction and consensus for action by creating understanding of the drivers of demand and the risks in forecasts. Even when the work is sound, though, uncertainties will remain: discontinuities will still be difficult to predict, especially if they are rooted in momentous political, macroeconomic, or technological changes. But managers who push their thinking through the steps in this framework will have a better chance of finding these discontinuities than those who do not. And those who base their business strategies on a solid knowledge of demand will stand a much greater chance of making wise investments and competing effectively. HARVARD BUSINESS REVIEW July–August 1988 9