TheEffects of Crystal Ball on Top Managers at Abu Dhabi National Hotels
TheEffects of Crystal Ball on Top Managers at Abu Dhabi National Hotels
Theuse of the crystal ball in guiding the business model goes beyondmaking some guesses pertaining to the future or even daydreaming.Indeed the use of crystal ball involves a process through which anindividual would paint a vivid picture regarding the manner in whichthe business environment would be within a certain number of years.Scholars note that there are a number of fundamental questions thatbusiness managers in any part of the world would have to ask if theircrystal ball is to be based on any factual information. Indeed, theywould need to ask questions pertaining to the general nature of theindustry and its economic climate, the future and current interestrates, possibilities for new entrants in the market and theirsubsequent effects, any laws and regulations that are likely toaffect the industry, as well as any features that are likely to beadded to the business (Rogoff,2007).Further, there are questions regarding the regulations and laws thatmay potentially have an impact on the industry in the future, any newproducts introduced by competitors alongside their success, the mosteffective marketing techniques at that time, as well as what emergenttechnologies are bound to be commonplace in the market and thegeneral population and even the rate of adoption of this technologyby the competitors.
CrystalBall and Five-Year Plans
However,it is imperative that individuals distinguish between crystal ballsand five-year plans. It is worth noting that business plans would beprimarily focused on the business without placing much emphasis onany modifications or transformations that may take place in the worldaround or the environment within which the business operates (Rogoff,2007).Crystal ball exercises, on the other hand, would primarily or evenentirely focus on the environment within which the business will haveto operate before allowing the management to make some fundamentalchanges in the business on the basis of the environments. Themanagers’ firsthand knowledge on the industry within which they areoperating gives them an opportunity to see into the crystal ball,thereby enabling them to make predictions pertaining to what thefuture holds in store for them.
Whatdoes good forecasting involve?
Goodplanning would always revolve around setting some performance goalsand then tracking the results against these same goals. Thisunderlines the importance of metrics and milestones that involvesetting numerical goals and then tracking the performances. Scholarshave underlined the fact that tracking such performance would, withno doubt, assist the business in enhancing its performance in boththe short-term and long-term (Haugan,2002).Indeed, the plan vs. the actual analysis would provide the varieddepartments and teams under the managers an opportunity to examinethe things that they planned, as well as carry out an analysispertaining to what happened (Schermerhorn,2011).
Ofcourse, there are questions regarding how managers in the Abu Dhabinational hotels would know what would be likely to happen in the nextfew years. This is indeed the basis of the use of crystal ball.Nevertheless, it is well acknowledged that the question would beappropriately answered by noting that leadership of any business orany business team would revolve around cooperation and collaboration(Kellogg et al, 2006). This means that the projection of businessactivities in the future would only take place in the presence of theappropriate plan that would help the individual to undertakeeffective management of the business (Rea&Kerzner, 1997).Of particular note is the fact that predictions of the futureprimarily involve projections pertaining to the present proceduresand automatic processes, or rather the likely occurrences in theevent that the concerned parties fail to take the appropriateactions.
Isthere any difference between forecasting and Crystal Ball?
However,there is no difference between forecasting and crystal balls.Forecasting would involve making assumptions, all of which areexpected to take place, which means that they are actually nothypothetical assumptions. In business or the use of crystal ball,managers would strive to make predictions pertaining to the thingsthat are likely to take place within a particular collection ofhypothetical assumptions also referred to as “what-if” scenarios(Feldman & Khademian, 2007). For instance, the managers would askquestions on what course or trend the profitability of a companywould follow if, for instance, a second shift is added in themanufacturing process assuming the cost allocations and currentproductivity levels remain at the same level (Shelton & Darling,2001). It is noted that all other assumptions that are used in makingsuch projection would still be expected to take place in line withthe hypothesis. However, it is important that one does not rely onthese assumptions too much as some of them may not even stand thetest of time. Nevertheless, the capability of undertaking forecastingdoes not revolve around being capable of predicting the futureaccurately, rather it revolves around the acceptance of the role thatuncertainty would play, undertaking a continuous process ofimprovement to build the capability of the firm, as well as clearingthe way for corporate success (Laseter et al, 2010).
Forecastingand Proper Projecting
Onthe same note, scholars examine the manner in which forecasting wouldbe used appropriately to make a proper projection. Prior toattempting to predict trends or course in the future, managers musttake cognizant of the fact that their input will always show up inthe outcomes. The use of unreasonable or baseless data andassumptions would result in projections that provide a grosslydistorted perspective pertaining to the future that has no likelihoodof taking place (Schermerhorn,2011).The creation of useable and valid projections necessitates that themanagement has a clear comprehension or understanding of the businessinvolved. This would involve adding accurate historical information,experience and proper judgment, which would provide an individualwith a proper formula for making reasonable predictions pertaining tothe future (Hendrick, 2003).
BusinessComprehension and forecasting
Theunderstanding of one’s business would necessitate that the managerlays a finger or identifies the fundamental factors that wouldeventually result in its failure or success. This would involvecarrying out a considerable amount of research so as to determine thenational and regional trends, industry standards, as well as theregulatory requirements, alongside the identification of the impactif future advances in technology and key competition (Schermerhorn,2011).On the same note, the manager would need to carry out an assessmentof the weaknesses and strengths of the management and employees ofthe business.
HistoricalInformation and Forecasting
Further,scholars have underlined the importance of historical information inmaking viable use of forecasting. The fact that the past alwaysrepeats itself would create the impression that the most appropriateway of predicting the future would be by carrying out a properexamination of the past. Indeed, scholars have underlined theimportance of historical information pertaining to finances and otheraspects of a business in making projections pertaining to the future(Schermerhorn,2011).Bankers and accountants who carry out an analysis of the projectedfinancial information of a company not only acknowledge itsimportance but also place immense emphasis on it (Carlisle, 2004). Itis always important that managers undertake a review of the recenttrends that a business or even other similar business experience soas to come up with a clear picture of the possibilities, as well asdevelop viable growth trends for the future. In using the corecastingto make predictions pertaining to the future, it is imperative thatan individual values experience and proper judgment (Gregoryet al, 2001).This underlines the importance of always aligning the plans andprojections with relevant market structures and theories throughobtaining the opinion of experts in the varied fields. Indeed, it hasalready been noted that historical information is pretty useful inthe making of predictions pertaining to the future.
However,there are instances where Abu Dhabi National Hotels are yet to have apast worth comparing notes with or referring to. In essence, gainingthe input of other individuals who know what can or cannot work in aparticular field would be imperative (Fairholm, 2004). Suchindividuals would have the capacity to examine the assumptions onwhich the forecast projections and plans are based and, therefore,sport any missed costs, assumption flaws or other issues that need tobe considered so as to make valid predictions (Gregoryet al, 2001).Of particular note is the importance of keeping one’s predictionswithin the reasonable range. Of course, it is well acknowledged thatthere are instances where the predictions or plans defy all laid outtheories and experiences, in which case a proper examination of thebasis of the plans would be imperative in both the long-term andshort-term (Schermerhorn,2011).Indeed, it may not matter much whether individuals are right aboutthe future rather it primarily involves what the managers want toachieve particular objectives in the future (Sindell, 2014). Suchre-evaluations would allow the manager to avoid some pitfalls in thecourse of coming up with the appropriate plans for reaching the goalsset out.
Whateffects do forecasting have on Top managers in Abu Dhabi NationalHotels?
Thereare not many studies that have been carried out regarding the AbuDhabi National hotels and the use of forecasting. Indeed, scholarshave acknowledged that the effects of forecasting on these entitieswould not be different from those other business entities. In asurvey that involved 122 top managers, of whom 34 were in the hotelindustry in Abu Dhabi in 2011, it was revealed that almost 96% ofthem used forecasting in making projections pertaining to the futureof their businesses, as well as mapping out a clear path for them. Ofcourse, there are variations between the needs of the managers(Schermerhorn,2011).They could need to forecast the growth and size of a particularproduct or market category or even the reactions and actions of keydecision makers like complementors, competitors, distributors,suppliers and even the government when considering strategic issues.The subsequent forecasts enable individuals to calculate salesforecasts thereby extrapolate sales more directly (Schermerhorn,2011).Similarly, they found it easier to forecast their costs and sales,thereby determine the likely financial outcomes and profits.
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