From the course: Financial Analysis: Making Business Projections

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Market-driven forecasting

Market-driven forecasting - Microsoft Excel Tutorial

From the course: Financial Analysis: Making Business Projections

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Market-driven forecasting

A final note on revenue forecasting. Many large corporations prepare their annual forecast based on their market share position and the expected growth of that same market. That methodology is based on market data that is produced and sold by organizations specialized in specific industries. Those companies gather sales data from the biggest players in the industry, consolidate them, and communicate back the aggregate view to their affiliates. Those organizations also analyze trends and evolutions in the market. And offer their opinion in terms of expected growth in the market. They also calculate the market share of the different players in that market. Corporations within that market then use that information to define their plan. For example, based on their current market share position, they can decide to set a market share goal for the year. Once that goal is defined, there is a revenue target that needs to be met in order to get those market shares. It also means that those…

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