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Paper Details

FORECASTING TECHNIQUES, OPERATING ENVIRONMENT AND ACCURACY OF PERFORMANCE FORECASTING FOR LARGE MANUFACTURING FIRMS IN KENYA

E. W. Chindia*1 F. N. Kibera2

Journal Title:Global Journal of Engineering Science and Research Management (GJESRM)
Abstract


This article explores the interaction between forecasting techniques (FT), operating environment (OE) and accuracy of performance forecasting (APF). Objectives were to compare FT in the APF, identify performance measures influenced by OE, assess moderating effects of the OE on the relationship between a FT and APF and examine relationships among FT, OE and APF. A model and framework are formed on the basis of previous research. Empirical testing of the model was done after collecting data using a structured questionnaire administered among randomly selected large manufacturing firms (LMF) in Kenya. Measures of APF included expected value (EV), return on sales (ROS), return on assets (ROA) and growth in market share (GMS). Objective, judgmental and combined FTs were used. Internal operating environment (IOE) comprised leadership, strategy, structure and culture; while customers, competitors, suppliers, substitute products and demographic characteristics constituted external operating environment (EOE). Empirical results indicate that the effect of objective and combined FT and EOE on APF was strong. Conversely, the effect of the IOE on APF was not strong. Further, the effect of the EOE accounted for more variation in APF compared to the IOE. Statistically significant were competitors and external customers on the influence of APF. The three FT yielded APF against EV and ROS. There was statistically significant evidence that (except for EV and ROS) EOE had an influence on APF. Regression analysis indicated that EOE had a partial moderating effect on the relationship between each of the FT and APF with respect to ROS and ROA for objective FT and ROA for both combined and judgmental FT. Alternatively, the IOE had a moderating effect on the relationship between objective FT and APF with respect to ROS; and the joint effect of the OE had a partial moderating effect on the relationship between objective and combined FT and APF with respect to EV and ROS. Results show that objective and combined FT yielded APF in a competitive environment. Hence, to achieve APF a FT should not ignore the effects of the OE. The study contributes by developing an exploratory model to link APF in LMF with variables of the OE.

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