THE ROLE OF FORCASTING IN BUSINESS PROFITABILITY: EVIDENCE FROM A SYSTEMATIC REVIEW

Abstract

The study gave insight into the niceties and technicalities of forecasting as a tool for business decision making for the attainment of the objective of profit maximization in business organizations. In adoption of a conceptual and exploratory research design, a review of available literature on the major types of forecasting used by business organizations as a precursor for planning and business development such as economic and finance forecasting, market demand forecasting and some recent types of forecasting including energy forecasting, manpower forecasting, flood forecasting, and technological forecasting recently imbued into business planning and decision making was reviewed. The study pointed out that the profit objective is the main reason for A highlight of the significance of forecasting in business organizations including identification of new strategies and innovation, streamlining of operations and resources coordination for enhanced profitability was buttressed. The study finally concluded by making recommendation for business to adopt affordable, cloud-based forecasting tools with machine learning and probabilistic outputs, starting with inventory, procurement, and pricing where errors are costliest. Building internal capability through training in data interpretation and scenario planning is essential, as technology alone does not reduce uncertainty, in developing economies marked by high volatility, businesses should institutionalize integrated forecasting that fuses internal data; sales, cash flow, capacity with external forecasts of FX, inflation, climate, and policy shifts to align operations with market reality.