Consensus Forecasts in Business Planning: Their Benefits and Limitations

CONSENSUS FORECASTS IN BUSINESS PLANNING: THEIR BENEFITS AND LIMITATIONS By Che-Wing Pang Consensus forecasts have a better track record than most individual forecasts, which make up the consensus … in any given year, some panel members predict the outcome better than the consensus, but cannot do so consistently … 'top performers' vary from year to year and are very difficult to identify in advance. Since the fortunes and risks of almost every business plan depend on the economy’s future course, timely and accurate economic forecasts for a company’s decision-making are considerably in demand. Long gone are the days when managers hesitated to integrate macroeconomic forecasts into their own projections for production and investment. The supply of quality information from both academic and private sector economists has never been as broad as it is today. However, for many users of economic forecasts, the number of competing (and often conflicting) predictions has created a dilemma of choosing one over the other. Generally, forecasters attempt to model the future of the world economy, a country, or an industry. However, numerous consulting firms, governmental, ...