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Business Forecasting - Lesson Plan: 2 x 1 hour lessons

A series of 'off the shelf' lesson plans and resources for use in the classroom. These lessons deal with Business Forecasting and are relevant to the following specifications:

• AQA: Unit 6, 15.6
• Edexcel: Unit 4
• OCR: Module 2880

Aim:

The aim of the lessons is to develop understanding of forecasting techniques and in particular look at the use of the moving average in forecasting. Students are encouraged to think about the strengths and limitations of using such techniques and to consider the effect on the reliability and validity of forecasting for different types of business, their financial position and the impact of external factors on businesses' ability to plan and make decisions for the future. The extension task introduces the idea that has gained some currency in some business circles: using astrology to help decision-making.

Learning Objectives:

At the end of the lessons, students should:

• Understand the two main methods of business forecasting
• Understand the purpose and use of forecasting for a business
• Understand the costs and benefits associated with forecasting
• Be able to perform basic calculations on data to produce moving averages and to predict future sales figures
• Be able to evaluate the reliability and validity of such techniques

Resources:

• PowerPoint Presentation - Business Forecasting [115 KB]
• Mind Map - Business Forecasting
• Activity - Business Forecasting
• Digital projector and white board

Lesson Structure:

Lesson 1

Students can be reminded of the key points from the Presentation on Business Analysis.

1. Explain to students the aims of the lessons and task. (10 minutes)
2. Show the PowerPoint Presentation and discuss with students the implications from the slides, e.g. the issues facing decision makers using quantitative and qualitative data and the strengths and limitations of using forecasting techniques. Students should be involved in the discussion and asked to use examples from their own working experience of how forecasting could be used and what problems might face the business in securing valid and reliable forecasts. (25 minutes)
3. Introduce the Activity and get the students to work through the steps up to the end of Task 9. (20 minutes)
4. Review the main learning outcomes. (5 minutes)

Lesson 2

The follow-up lesson can be used to complete the Activity if necessary and to spend some time discussing the factors that might affect the reliability and accuracy of the prediction made. Factors to raise include:

• The type of business under consideration.
• The financial state of the business - the gearing, for example.
• The extent of the impact of external factors, such as political, economic or natural issues

Recent examples can be used to highlight the difficulties facing businesses in making accurate forecasts - 9/11, the rising price of oil, the outbreak of war, stock market movements, election results, the possible outcome of elections (for the US Presidency), the movements in interest rates, environmental concerns and so on.

The aim of the lesson is to help students build their evaluation skills, so guidance should be given on structuring an answer, using examples, drawing comparisons and contrasts and making supported judgements.

An extension task is provided to help students develop these evaluation skills further.