The importance of predicting future in business (Essay Sample)

THE IMPORTANCE OF PREDICTING THE FUTURE IN BUSINESS Name of Author Institutional Affiliation Date of Submission Economists have established that the major problem in the business sector relates to the scarcity of economic resources. Unlike the insatiable demand factors, investment resources are limited in nature. For this reasons, firms have to compete for these scarce resources to be successful. Notably, only those businesses with the ability to understand the market operations stand better chances of succeeding. Since the future is characterized by many uncertainties and risks, it is fundamental for firms to carrying out a comprehensive analysis of the prevailing business climate. The ability to predict the future with precision increases the probability of enterprises gaining dominance-related advantages over other players by understanding the possible changes in the regulatory policies, political conditions, and analyzing the strategies of the competitors. In the view of political economists, the ability of the business enterprise to succeed in any competitive market characterized by information symmetry is dependent on the capacity of the management to study and understand the prevailing political conditions. It is because political institutions are among the bodies involved in the formulation of business and economic policies. For instance, political forces take part in the establishment of fundamental monetary institutions such as the central bank, tax authority, and other business regulatory bodies. These are indications that political factors are critical in determining the performances of business entities. Consequently, only firms capable of predicting the possible future changes in the political scene are more likely to remain competitive. Failure to foresee the suitability of the future political cycles can adversely affect the performance of business units. This is evident in developing countries that often experience political instability, thus impacting negatively on the corporate sectors. The ability of business enterprises to be successful in any competitive environment depends on external factors such as the market powers of the competitors. While most managers only focus on the micro-factors of growth, Aven established that macroeconomic forces are fundamental in determining the profit margins of business entities. In particular, the marketing and pricing strategies adopted by the competitors influence their market shares. Therefore, it is important that all firms invest adequate resources in market analysis. This entails studying the production techniques, product pricing, and marketing mechanisms of the competitors. In essence, firms must be able to predict the competitors’ next moves. This would help them stay ahead of the rest in the game. In conclusion, the scarcity of economic resources makes is very challenging for businesses to succeed in competitive environments. Unlike those enjoying the monopoly powers, competing firms devise strategies that would make them more favorable to benefit at the expense of others players in the industry. This involves predicting the future moves of the competitors. For instance, expecting the price levels to fall, the firm should enjoy the ‘first mover’ advantages by acting ahead of other players. Additionally, it is essential for the management of business enterpri...