An effective manager

An effective manager must be able to estimate, with a certain degree of , accuracy, the future performance of his or her areas of responsibility within an organization. Forecasting refers to the methods managers use to predict future events. The purpose of a forecast is to reduce the uncertainty regarding the fu­ture. The more certain a manager can be about future events, the better and more effective his or her decisions are likely to be. Note that a forecast is not the same as a decision. A forecast predicts future events or conditions in such a manner that a manager can use the information when making a decision. Since the outcome of a forecast often determines which decision is made by a manager, accurate forecasts are crucial to decision making.

The importance of forecasting should not be underestirnated. Often, the information obtained from a forecasting model will be used as input for other decision models. If errors are made in a company's forecasts, these er­rors can lead to poor decision making throughout the organization. Such er­rors can subsequently lead to costly and unprofitable outcomes. For exam­ple, many managerial decisions require information relating to forecasts of future demand for a company's products and services. This information is used in various areas of a company to help determine advertising budgets, quantities of products to be produced, numbers of employees to hire, levels of financing required, and the level of purchase commitments for supplies and equipment. Incorrect forecasts of demand could cause wrong decisions to be made regarding these other factors. If such errors are large enough, they can lead to disastrous performance levels for a manager or company.

In recent years, the sophistication and accuracy of forecasting meth­ods has increased steadily. Three major reasons account for this increase:

Expanded use of computers and the growth of their capabilities. Computers are now widely used to perform calculations that previ­ously would have been virtually impossible to do manually.

The increase in the amount of data available for use in forecasting. All forecasting methods use data on past history. Data that was often not Available before the widespread use of computers is now frequently produced as a by-product of a company's information systems. For example, data on the demand for a company's products and services is now often obtainable from a firm's accounting or other internal data processing system. Additional data is also now widely available from firms that collect, organize, and sell data to companies that need to supplement their own internal data bases.

The development of more accurate forecasting systems.

The growing interest in management science has fostered the de­velopment of more accurate forecasting models.

Ex. 7. Match the beginning of the sentence with the ending of it.

Beginning	Ending
An effective manager must be able to	data on past history
All forecasting methods use	estimate, with a certain degree of , accuracy, the future performance of his or her areas of responsibility within an organization
The purpose of a forecast	the de­velopment of more accurate forecasting models
A forecast predicts	is to reduce the uncertainty regarding the fu­ture
The growing interest in management science has fostered	future events or conditions in such a manner that a manager can use the information when making a decision

Grammar focus.