Forecasting Techniques, Operating Environment and Accuracy of Performance Forecasting for Large Manufacturing Companies in Kenya
Abstract
This study explored the relationship among forecasting techniques, operating
environment and APF in LMFs. Study objectives were to compare forecasting techniques
in APF, identify performance measures influenced by the operating environment, assess
moderating effects of the operating environment on the relationship between a method
and APF and to examine the relationships among forecasting methods, operating
environment and APF. A model and framework were formed on the basis of previous
research, an empirical testing of the model was done after collecting data using a
structured questionnaire, From a sample frame of 487 LMFs proportionate stratified
random sampling was used to select a sample of 217 firms. Response rate was 81 percent.
Data analysis used descriptive statistics, factor analysis, ANOV A, correlation and linear
regression. Hypotheses were tested by analyzing independent effects of selected variables
on APF. Results indicated there was empirical evidence that the effect of objective and
combined forecasting techniques, and external operating. environment on APF was
strong. Conversely, empirical evidence indicated the effect of variables of the internal
operating environment on APF was not strong. Further, the effect of variables of the
external operating environment accounted for more variation in APF compared to
variables of the internal operating environment. There was statistical evidence that
competitors and external customers influence APF. For objective one the hypothesis on
the influence between a forecasting method and accuracy of performance forecasting was
tested using objective, judgmental and combined forecasting methods. Measures of
accuracy of performance forecasting used were EV, ROS, ROA and growth in market
share. Results provided statistical evidence that the three forecasting methods yielded
APF against expected value and ROS. It was concluded that the three forecasting
methods could be used to accurately forecast expected value and ROS. Objective two was
to identify performance measures that were influenced by the operating environment in
LMFs. The above performance measures were tested against leadership, strategy,
structure and culture as elements of the internal operating environment and customers,
competitors, suppliers, substitute products and demographic characteristics as parameters
of the external operating environment. There was statistically significant evidence that,
except for EV and ROS, external operating environment had an influence on APF.
Objective three assessed moderating effect of external and internal operating
environments on the relationship between a forecasting method and APF. Using
regression analysis, results indicated that external operating environment had a partial
moderating effect on the relationship between each of the forecasting methods and APF,
with respect to ROS and ROA for the objective method and ROA for both combined and
judgmental methods. Conversely, the internal operating environment had a moderating
effect on the relationship between objective forecasting method and APF with respect to
ROS. Objective four examined relationships among forecasting techniques, operating
environment and APF. Using regression analysis, results showed that the joint effect of
the operating environments had a partial moderating effect on the relationship between
objective and combined forecasting methods and APF, with respect to EV and ROS.
Study findings indicated that objective and combined forecasting yielded APF in a
competitive environment. For APF a forecasting method should not ignore the effects of
the operating environment. The study contributes by developing an exploratory model to
link LMFs APF with variables of the operating environment.
Publisher
University of Nairobi
Description
PhD