You are asked by a firm to forecast sales of their main product for the next two years..

[nobledevotee]

...on a monthly basis.? You learn that the firm has two divisions, A and B, where A is twice the size of B. The divisions sell the same product but in different geographical markets. The firm was originally just division A, but bought division B in a horizontal merger three years ago. You have 6 years of monthly data on division A and 3 years on Division B. Describe how you would handle the fact that you do not have a full set of historical data for Division B in your forecast approach.

 

[karthickk3]

Answer to this question depends on for which years you have the datas of firm B. And while estimating the profits of business, you must understand that business means the profit should have been improved every financial year, atleast little improvement. And you need to consider the following factors while estimating the business for firm A and firm B.

1. Goodwill is important to any business. At the time you bought firm B, if it was not having good name because of the previous proprieter, you must spend time and money to get new customers and to keep them.
2. Gegraphical Issues : If firm B is in rural area, you should spend for its publicity. The case is same with firm A.
3. Then check if the datas you have for first 3 years of firm B, it should have been produced less profit compared with A as A was new which would attract customers normally.
4. If the datas are of last three years, then you should check profit comparing A and B head to head. But you must keep the investments in mind. Most of the business tantra is 'invest more, get more' unless your ideas are uncomparable.

I am not able to give more details since datas you provided was not sufficient.

 

[mule]

I'm assuming the reason you don't have it is because it's not available, then:

I wouldn't worry about it because: What's more important in a sales forecast are the future expectations, trends, market conditions, competitiion, etc.

I would limit the historical data to 3 years of history and it should not be an issue.

I would then go to the Sales Manager(s) responsible for product sales to obtain their input because they are best equipped to know what is happening in the marketplace regarding: market conditions, changes, trends, (including any changes in consumer uses, product innovations, technology and obsolescence factors), competitive situations, and most importantly future expectations and supporting rationale, etc.