Identifying Long Term Trends
The use of economic variables in identifying long term financial goals is considered to be a process, which is directly related to the management. The economic variables are designed in order to “measure domestic and external economic performance of the country and the impact of exogenous shocks on the rating agencies’ assessments of a country’s creditworthiness”ť (Haque, Mark, & Mathieson, 1998, p. 6). The use of economic variables to identify the company’s financial plan is seen as a perfect starting point in order to manage a budget, long term financial goals, and other determinations concerning the company’s operations.
Thus, there are many different economic variables that influence a business as a whole. The interest rates, inflation, export growth, current account/GDP, employment trends are among those economic variables.
The major financial objective of all the business organizations including Nike Inc. is to maximize their profits. To do this, it is essential to fully understand the economic variables that clearly reflect the results of measurement factors that affect the value and profitability of the company. It is important for the financial managers of Nike Inc. to use economic variables because they will help to examine how changes in the business environment may affect the expected results of the company. Additionally, the economic variables will be useful in determining what degree the company’s long-range business planning is executable.
Forecasting through economic variables is essential to all the organizations, including Nike Inc. It is viewed as the process of the development of economic forecasts, based on the scientific methods of economic phenomena and the use of the totality of methods, tools and modes of economic prognostication.
There are different kinds of techniques and tools that the financial managers of Nike Inc. can use for forecasting future directions in the stock market and in the economy as a whole. Delphi financial forecasting is one of the most common methods used to identify and investigate the problem within the company. The main purpose of this method is to gather the different opinions of various experts and then to generalize them into a single assessment. Delphi financial forecasting involves the use of a series of questionnaires, each of which contains information and opinions obtained from the previous survey.
There is another method that can be used by the financial managers of Nike Inc. It is called the percent of sales method. This technique is based on the assumption of a stable relationship from a number of financial indicators and the value of income. The percent of sales method is “used to construct forecasts of future business performance, often represented by pro-forma ”“ or forward-looking ”“ financial statements”ť (Petryni, n.d., para. 1).
Consumer survey forecasting is the third technique the financial managers of Nike Inc. are able to utilize for their forecasting future directions. This method makes it possible to obtain information about the attitude of potential buyers to the products, services and businesses, help to forecast the consumer market, and identify deficiencies in the implementation of the product or service.
In conclusion, it is possible to say that Nike Inc. can utilize this method in order to decide which products may be offered to their potential consumers, to identify the deficiencies in the implementation of the products and to determine how these products should be marketed in a proper way.