Describes the uses of business inventory control. Include at least one real world example and apply at least one inventory control
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Forecasting in business is a strategic tool that is used by businesses to help predict their possible outcomes in the future. There are a variety of areas that can be predicted within business, but one of the primary focuses is on profits. With that, while strategic forecasting exists, a lot of forecasting for businesses is done at an operational level. The concept of forecasting can seem to be daunting because there is always a risk in correctly identifying unknown factors, such as quantity and supplementary factors. If a business wants to build and utilize a successful predictive model, then they must first define the analytic objective. The purpose of the predictive model is to fulfil the analytic objective. There are a series of categories for predictive models which includes models such as a response model. This model s used to identify individuals likely to respond to an offer or solicitation. An up-sell and cross-sell model which is used to predict the likelihood of existing customers wanting to purchase additional products from the same company. Also, the risk assessment model which is used to quantify the likelihood that an event with adversely affect business. An attrition model which is used to gauge the probability of a customer taking his or her business elsewhere and a lifetime value model which is used to evaluate the overall profitability of a customer over a predetermined length of time (Constangioara, Bodog, Laszlo &Petrica, 2009).
Of the models discussed above there is a further breakdown of business applications that are used in predictive modeling. One of the forms would be database marketing. This method uses customer databases to improve the sales promotions for the company and promote product loyalty. Additionally, there is a model that uses historic customer databases as a means of predicting which customers are more likely to switch brands or even cancel subscriptions. These are all predictive models that a company will use as a means of determining what and how they want to proceed with their business in the future (Constangioara, Bodog, Laszlo &Petrica, 2009).
A business that was founded in 1967 and has been on an upward trend towards success that potentially utilizes these methods would be Chick-fil-A Inc. This is a company that was founded by a man names Truett Cathy out of Atlanta, Georgia, after he decided that he wanted to venture into the concept of fast-food restaurants over his typical sit-down restaurant ownership. Chick-fil-A is said to be the United States’ third largest fast-food chain that specializes in chicken. Originally, the concept of fast-food restaurants was typically set in a mall setting where customers could go to the mall to shop and then have a place to sit down and enjoy a meal without needing to leave the mall to do so. This was a very profitable area to be in and Cathy and his Chick-fil-A business took full advantage. At one point the concept of fast-food restaurants and chicken fillet sandwiches became so popular that Cathy put out a number of coupons in the local papers, but the influx of customers was almost two times what was expected and actually caused some financial harm to the companies’ overall profits. This isn’t something that scares Cathy away though. The company was founded on a few core principles including the company would grow not by selling franchises, but by forming joint ventures with independent operators. They would also operate exclusively out of shopping malls; this stipulation was later amended due to the growth potential for the company. The third stipulation was that financing the company would come not through debt, but primarily through the companies own profits, and lastly, the people of the company would be the primary focus of Chick-fil-A Inc (Chick-fil-A Inc., n.d.).
One major difference about Chick-fil-A, aside from being a privately-owned company that is not sold to shareholders, they have a very unique business method with their operator’s agreement. With this agreement, when a new Chick-fil-A location is being determined the company does not reach out to potential franchisees, rather the company looks at its current employees and selects and individual that is deemed to be responsible and can bring success to the company. The operator selected is then required to put in an investment of only $5,000, which is pennies compared to some franchises. They then go on to receive six weeks of paid training and then begin to lead their own Chick-fil-A company with a promised minimum income of $30,000 annually with the potential to make six figures with the restaurant’s success. Chick-fil-A also offers an incentive to its hourly employees of a $1,000 scholarship award, called team members, who are high school graduates and have been with the company for more than two years and recommended by the restaurant’s operator (Chick-fil-A Inc., n.d.).
One of their strengths is customer service. If you even been to their restaurants, you are always greeted with a smile. The go above and beyond to please the customer. Another strength is that they only sell chicken products, they do now use red meat. Some people avoid red meat because negative connotation like cancer and heart problems. They pay their employees much higher than the industrial average. It is a fact, happy employees will be more productive, reliable, and responsible. One of their weakness is their poor geographic coverage. They only have restaurants in the US. Other fast food restaurants like McDonald’s and Burger King have restaurants all over the world. One opportunity for chick Fil A is healthy fast food. More people are becoming more educated and care about what they eat.
While some might see the way that Chick-fil-A operates as slightly askew to the typical for-profit company, it is actually emulated by a number of companies within the United States for how it runs its day-to-day businesses. With that, Chick-fil-A is also highly profitable and is estimated to be worth $1 billion. The following is a description of the profits made by Chick-fil-A over the last XX years. Their total revenue increased 13.7% to $3.0 billion compared to $2.6 billion in 2017. As of December 31, 2018 they had 1,989 franchised and company operated locations. They had an increase of 107 new locations. Their total system wide sales had increased of 16.3%, from $8.6 billion in 2017 to $10 billion in 2018. The average annual sales for location not in malls was $5,724,126.THIS IS WHERE WE NEED TO PUT IN AN EXPLAINATION OF THE FINANCIAL INFORMATION FOUND AND THE METHODS THAT WERE USED. (like I said, it can be pretty rough and to the point and I can go in and extrapolate to make sure the paper reaches the required minimum of 5 pages. Please let me know how this reads and if you think it is missing any information) (I also have an article on using the Cloud for demand forecasting. This could be as a last portion of the paper, like where is this going, something that will be used in the future, etc.)
A.Constangioara, S. A. Bodog, F. G. Laszlo, & D.Petrica. (2009). Forecasting in Business. Journal of Electrical and Electronics Engineering, 2(2), 211–214. Retrieved from https://doaj.org/article/84cb288977c9451cba5f6a499a7d90db
Bhasin, H. (2019, April 2). SWOT analysis of Chick-fil-A – Chick-fil-A SWOT analysis. Retrieved January 28, 2020, from https://www.marketing91.com/swot-analysis-chick-fil/
Chick-fil-A Inc. – Company Profile, Information, Business Description, History, Background Information on Chick-fil-A Inc. (n.d.). Retrieved from https://www.referenceforbusiness.com/history2/65/Chick-fil-A-Inc.html
Chick-fil-a reports record revenue, profits up 5.7% in 2018. (2019, April 14). Retrieved January 28, 2020, from http://www.restfinance.com/Restaurant-Finance-Across-America/April-2019/Chick-fil-a-reports-record-revenue-profits-up-57-in-2018/