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Industry Forecasting

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Industry Forecasting
Joey Willoughby
BUS620 Managerial Marketing

Instructor: Dr. Mary Wright

July 2, 2012

Industry Forecasting

An organizational environment is composed of “the actors and forces” outside marketing that affect marketing management’s power to develop and sustain successful transactions with its target consumers. Macro-forecasting in industrial settings is basically concerned with the forecasting of markets in total. This concerns the existing level of market demand, while also considering the market’s future. New homes are a product offered within an industry (construction), in which macro-trends could have a major impact over the next five (5) years. An organization’s macro-environment relates to the larger forces having a direct impression on society as a whole. An organization has little, if any ability to sway these said forces, and thus can only adapt its marketing mix to provide a reason for the resulting opportunities and threats.
(Weigand, Robert A. 2012) There are many features of an industry that may determine the degree of competition, as well as the relative position of profitability in an organization. Several macro-trends encompass industry forecasting and can impact either negatively or positively within an organization. The macro-trends include: Economic trends: In this particular macro-trend the macro environment analysis identifies trends such as changes in personal disposable income, interest rates, inflation, employment ratings, and cost of living. The economic environment ascertains the strength and size of a market. (www.oup.com ) Excessively high interest rates may discourage investment in new home construction due to the fact that it costs potential customers more to borrow. In our current economic situation, many people have faced foreclosure on their homes, which has produced a surplus of houses on the market. Even though the prices on these foreclosed homes are considerably lower than normal, individuals are not purchasing due to the uncertainty of the economic future. (Weller, Christine E. 2006) This indicates that the housing industry may be facing some tough times in the next five (5) years. Political trends: The macro-political analysis identifies trends which pertain to governmental policy such as the degree of intervention in the economy. A weak economy does not foster spending in the public sector. Politicians could exacerbate spending by introducing bills and programs, which could improve unemployment ratings, interest rates, and scale back inflation. If these aforementioned factors came to fruition this could result in more individuals purchasing a new home. If these factors are not addressed in a feasible manner, the construction industry has no chance for growth and stability. ( Byun,Kathryn J., & Frey, Christopher, 2012) Technological trends: This factor identifies changes in the application of technology. A prime example of such a technological trend is the ability to shop online for building contractors. This factor allows competitors a distinct advantage to under cut prices and to literally take, what few customers that a construction organization could potentially acquire. In order to be competitive in this scenario, this implies that the construction organization must be on the up-and-up with technological trends in order to be sustainable as well as profitable. Legal trends: Legal trends are closely connected to political environments insofar as politicians tend to make laws but also include trends in court decisions. One aspect of legal trends is the greater requirement for construction industries to recycle. These legal trends can adversely affect an organization’s cost factor, especially if new systems or procedures have to be incorporated in respect to compliance. Any additional costs to an already floundering organization can be detrimental to its survival. Social/cultural trends: Macro-trends in this area identify the trends in societal behaviors, norms and values, skills, and aging populations. In this respect, the construction industry must perceive that the majority of the aging population already have homes or are entering long-term care facilities and placing their homes on the market. The younger population group is struggling with factors such as unemployment, high interest rates, and inflation. These factors must be taken into consideration and addressed appropriately or the next five (5) years will be critical for the construction industry. Demographic trends: This macro-trend concept reflects the market size of the industry, or what demographic trends represent opportunities or threats. Race, age, and income are indicative of this trend. It is imperative that an organization summarize these opportunities or threats to determine if it should expect growth stability or a decline in its industry. Natural trends: This macro-trend concept consists of such factors as raw materials shortage, higher energy costs, higher costs of fuel, and drought and water restrictions. Any of the preceding factors can lead to devastating damage to the construction industry. A prime example of this is that the construction of a home requires a substantial input of goods and services such as floor covering, lumber and kitchen and bath fixtures and the transport of said materials to the construction site. If there is a shortage of these goods and fuel costs rise to a critical level, this will have a major impact on the organizations growth, stability, and prosperity. An organizational environment is composed of the “actors and forces” outside marketing that affect marketing management’s power to develop and sustain successful transactions with its target consumers. Macro-forecasting in industrial settings is basically concerned with the forecasting of markets in total. This concerns the existing level of market demand, while also considering the market’s future. If construction industries do not utilize macro-trend analysis within its organization, the construction industry could well be facing some dismal times in the near future. References

Byun, Kathryn J., & Frey, Christopher The U.S. Economy in 2020: Recovery in Uncertain Times (January 2012) v.135, iss.1, pp 21-42. Retrieved from web.ebscohost.com June 27, 2012. www.oup.com/ orc/bin/9780199296378/ 01 Gillespie: Foundations of Economics. Retrieved June 28, 2012.
Weigand, Robert A., Applied Portfolio Management: Macroeconomic Analysis and Forecast. (February 2012) www.Washborn.edu/sobu/apm/page 2/market.html. Washburn University School of Business. Retrieved June 29, 2012.
Weller, Christian E., (Dec. 2006) The End of the Great American Housing Boom: What It Means for You, Me, and The U.S. Economy. www.americanprogress.org./issues/2006/ 12/ End-of-the-boom.html. Retrieved June 29, 2012.

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