An Overview of Forecasting Error among International Manufacturers

By Tokle, Joanne; Krumwiede, Dennis | Journal of International Business Research, July 1, 2006 | Go to article overview
Save to active project

An Overview of Forecasting Error among International Manufacturers

Tokle, Joanne, Krumwiede, Dennis, Journal of International Business Research


This article summarizes the most recent survey results in regard to forecasting practices and forecasting error of sales for Global Manufacturing Research Group (GMRG) participants. GMRG includes over 200 manufacturing companies from Hungary, Lebanon, Italy, Taiwan, and the United States. Participants in GMRG reported average forecast errors for sales of around 20%. A number of findings concerning use of forecasts, methods of forecasting, factors considered in the sales forecast, primary authority for the forecast, and variation in forecasting error by country are detailed. The practices of GMRG participants may be of interest to forecasters in like-minded companies.


The Global Manufacturing Research Group (GMRG) is an organization of academic researchers interested in international manufacturing research. GMRG has administered surveys of manufacturing practices to companies worldwide; this paper summarizes results of the third survey, collected in 2003-2004, that pertain to forecasting accuracy, including methods of forecasting used, who is responsible for the forecast function, factors considered in the sales forecast, and how the forecasts are used. The international comparisons of forecast error and reliance on various forecasting techniques are of particular interest.

Companies that participated in the survey were located in Italy, Lebanon, Hungary, Taiwan, and the northwestern United States, and included firms from the following manufacturing industries: electronics, machinery, cables, plastic furniture, plastic containers, plastic packaging, food products, textiles and building materials. The companies and countries were not randomly selected for inclusion but participated based on location, availability of management information, willingness to participate and products manufactured.

The 235 companies in the sample ranged in size from 6 employees to 9,500 employees, with a median of 142 employees, and with sales ranging from $50,000 to $16.3 billion and a median of $29 million in sales. Many, but not all, companies reported exporting their products; on average, they reported that about 45% of their sales were exports. The companies were also mainly domestically owned (78% of ownership, on average, was domestic).

The companies in this sample relied to a greater degree on management opinion than on quantitative (e.g. regression) or qualitative (e.g. survey) techniques in forming their forecasts. "Forecasts" refer to total sales of the company. The variable of interest is the average percent forecast error over the past two years.


Wacker and Sprague (1995; 1998) used previous GRMG survey results to examine forecasting accuracy. They first used a sample of UK manufacturers to investigate the effects of institutional factors, such as technology culture and forecasting methods used, on forecast accuracy (1995). They found that companies with newer technology tended to have lower forecast error, and companies that measured forecast error had more accurate forecasts. Companies that had high forecast error modified their forecasts more frequently. In addition, companies for which sales planning was the primary purpose of the forecast tended to have more accurate forecasts. Companies in which top management was involved in the forecasting procedure had lower forecast accuracy.

A subsequent study by Wacker and Sprague (1998) used GMRG survey results from seven countries, including Germany, Japan, Mexico, New Zealand, Spain, Sweden, and the United States, to compare the relative effectiveness of management behaviors that affect forecast accuracy. This study found country differences in forecasting that were partially explained by Hofstede's cultural values dimensions. For example, companies in countries with high individualism tended to be more technology oriented and top management less involved in forecast development than companies in collectivism countries.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

An Overview of Forecasting Error among International Manufacturers


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?