What Will Commercial Printing Look Like in 2008? 2011?
For the past two weeks, subscribers to PrintForecast Contrarian View were provided with a review of two dissimilar forecasts created by our proprietary forecasting models. Using the broadest measure of the number of commercial printers from the U.S. Department of Commerce, one forecast shows today’s approximately 35,000 establishments declining to 28,000 by 2011; the other shows the number of establishments remaining about the same.
Forecasting models come in a variety of flavors. Some are very conservative and minimize historical changes and develop an average forecast. Other models, however, place significant emphasis on the most recent trends. The two models we used for this exercise occasionally result in surprising consistency; there are often two paths to the same destination in forecasting. Other times the models will produce markedly divergent projections. Understanding how they got there is quite revealing.
The scenarios were presented to PFC-CV subscribers in greater detail and analysis over the last two issues. But here are the highlights for 2011:
Forecast Scenario 1: 28,000 establishments, $66 billion in shipments
Forecast Scenario 2: 35,000 establishments, $53 billion in shipments
They are quite different, and they are both legitimate statistical forecasts. Neither of them will be right, most likely. The examination of alternative scenarios, however, is an important element of a beneficial strategic development process. No one can accurately forecast the future with great certainty. Most times, future trends are clear but the timing is not. The way management prepares itself to deal with changes in the marketplace is to create scenarios of differing market conditions and to think them through, company function by function. This aids in the creation of a robust strategy that can withstand market uncertainties. It also allows management to develop contingency plans that they can implement at the appropriate time.
Among the questions that this exercise can help explore are. . .