The Impact of Forecasting on Strategic Planning and Decision Making: An Exploratory Study of Nigerian Stock Exchange

Abstract

Ineffective application of effective planning in many organisations is themain thrust for their inability to predict and make a sound decision whichlead to the failure to achieve projected performance. This paper examines the decision making and planning process with the use of multiple regression analysis model to forecast the stock market activities of each sector listed on Nigerian stock Exchange by using the number of deals in share and number of share in unit to explain the strength of relationship and the extend of relationship between the value of share in Naira i.e. capitalization in stock for every listed trading sector on Nigerian Stock Exchange market. This study was designed to give strategic managers practical suggestions for better understanding of the forecast so that managers can plan their reactions effectively to enable better performance. The prime objectives of this paper is to develop an operational research model that will assist investor, investment manager and stock broker that participate in stock exchange trading to have an accurate forecast of trading activities on Nigeria stock market. Also, to determine the most suitable planning strategies for the investment manager in relations to Nigeria stock market activities. A dynamic regression model was used as an input data to analyse part of this empirical study that consist of activity summary of Nigerian StockExchange. The paper suggestion was based on the recognition that forecasts are derived to serve specific strategic planning and decision making, and that these decisions must be congruent with the company strategy. It therefore concludes that future forecasting must be based on several factors that can affect market value which call for the broadening the understanding of the role of forecasts in strategic decision making.