DEMAND

ANALYSIS
AND
ESTIMATION
SALITA, Lorie Jane B.
Consorte, Ginnel
Maliwat, Mira Grace
DEMAND ANALYSIS AND ESTIMATION
The Rise of the Global Corporations
The Global Business Leader
The World Most Admired Leader
Demand Analysis
Demand Estimation
Forecasting
THE RISE OF GLOBAL CORPORATION
What is a global corporation?
Also known as global company
A company that does business all over the world; any company that
operates in at least a country other than the country where it
originated.

Global Corporations are inseparable to the phenomenon of

globalization.
THE RISE OF GLOBAL
CORPORATION

The History of Global Corporations

Three Periods
Colonialism and Imperialism.
Post World War II era where it was dominated by American
Corporations .
The Re-entry of Japanese and European corporations onto the global
scene.
THE RISE OF GLOBAL
CORPORATION
The contemporary global corporation is simultaneously and commonly referred to :
Multinational Corporation (MNC) - have investment in other countries, but do not
have coordinated product offerings in each country. They are more focused on
adapting their products and services to each individual local market.
Transnational Corporation (TNC) -are more complex organizations which have
invested in foreign operations, have a central corporate facility but give decision-
making, research and develop (R&D) and marketing powers to each individual
foreign market.
International Company - are importers and exporters, typically without
investment outside of their home country
Global Company - have invested in and are present in many countries. They
typically market their products and services to each individual local market.
THE RISE OF GLOBAL
CORPORATION

What constitute the essence of the present day global

corporations?
The structural transformation of global commerce from producer
driven community to chains to buyer driven.
The advent and impact of digitalization and instantaneous global
communications.
THE RISE OF GLOBAL
CORPORATION

BRIC ECONOMIES (Brazil, Russia, India, and China)

The most dynamic sector of global corporate growth.
Dominated the growth of the convergent group in the "four-speed
world" (Affluent, Converging, Struggling, Poor) by Wolfsensohn.
With forty percent of the world population, BRICS economies
represent a primary force in both global production and
consumption.
THE RISE OF GLOBAL
CORPORATION

List of Emerging Market Global Corporations :

Basic Element (Russia) is a world leader in alumnia production
Bharat Forge (India) is one of the world’s largest forging companies
BYD Company (China) is the world’s largest manufacturer of nickel-
cadmium batteries
CEMEX (Mexico) has developed into one of the world’s largest
cement producers
China International Marine Containers Group (China) is the world’s
largest manufacturer of shipping containers
THE RISE OF GLOBAL
CORPORATION

List of Emerging Market Economies :

1. Argentina 9.Indonesia 16.Saudi Arabia

2. Brazil 10.Iran 17.South Africa
3. Chile 11.Malaysia 18.Thailand
4. China 12.Mexico 19.Turkey
5. Colombia 13.Philippines 20.United Arab Emirates
6. Egypt 14.Poland
7. Hungary
15.Russia
8. India
THE GLOBAL
BUSINESS LEADER
Global Business Leaders
are individuals who occupy senior positions
within organizations
manages a business across borders where there
are different cultural, legal, and economic
systems
THE GLOBAL
BUSINESS LEADER
Characteristics of a Global Business
Leader
Overseas experience Global strategic thinking
Deep self-awareness Patiently impatient
Humility Well-spoken
Lifelong curiosity Good negotiator
Cautious honesty Presence
Sensitivity to cultural diversity
THE WORLD MOST
ADMIRED LEADER
THE WORLD’S MOST ADMIRED
BUSINESS LEADER IN 2022: TIM COOK
Who is Tim Cook?
Name: Timothy D. Cook
Born: November 1,1960 in
Mobile, Alabama
Nationality: American
- He is now the Chief
Executive Officer (CEO) of
Apple since August 2011
THE WORLD’S MOST ADMIRED
BUSINESS LEADER IN 2022: TIM COOK
THE WORLD’S MOST ADMIRED
BUSINESS LEADER IN 2022: TIM COOK
Global revenue
of Apple 2011 -
2022
THE WORLD’S MOST ADMIRED
BUSINESS LEADER IN 2022: TIM COOK
Historical background of Tim Cook
before he became the CEO of Apple
He earns his bachelor’s degree in industrial
engineering in Auburn University
Work for 12 years in IBM (1982-1994)
Became the North American Fulfillment
Director and earns his Master degree in
Duke University in business administration
THE WORLD’S MOST ADMIRED
BUSINESS LEADER IN 2022: TIM COOK
Historical background of Tim Cook
before he became the CEO of Apple
He was t h e Vice Pre s id e n t of C orpora te
Mat e r i als f o r Compaq-
Seni o r Vice Pres id e n t of A pple f or
wor l dwide o pe r ation (1998)
Chi ef Ope rating O ffice r of A pp l e (2 009 )
THE WORLD’S MOST ADMIRED
BUSINESS LEADER IN 2022: TIM COOK
Qualities of Cook that made him the
most admired leader of today’s World.
Demo cratic and T ran s formatio na l
Leader ship s tyle
Tr ans pare ncy Admi t wro ng
Li st eni n g actively St r at e gic Plann e r
Tr u st
Ri sk t ak e r
THE WORLD’S MOST ADMIRED BUSINESS
LEADER BEFORE AND AFTER PANDEMIC
2019; Warren Buffet, CEO of
Berkshire Hathaway
Home Services
THE WORLD’S MOST ADMIRED BUSINESS
LEADER BEFORE AND AFTER PANDEMIC
2020; Jamie Dimon, CEO of
JP Morgan Chase
THE WORLD’S MOST ADMIRED BUSINESS
LEADER BEFORE AND AFTER PANDEMIC
2021; Satya Nadella, CEO of Microsoft
DEMAND ANALYSIS
DEMAND ANALYSIS
Demand - it is the consumer’s desire, willingness, and
ability to purchase goods and services at a given
price, place, and time.
Analysis - it is a detailed examination of anything
complex to understand its nature or to determine its
essential feature.

What is Demand analysis?

Demand analysis is a business technique that is used
to understand the consumer's demand for a certain
product.
DEMAND ANALYSIS
Is it important to a business?
Demand Analysis help the managers in making
decisions, specifically in:
a. Sales forecasting
b. Pricing Decision
c. Marketing Decision
d. Production Decision
e. Financial Decision
f. Investment Decision
DEMAND
ESTIMATION
 What will happen to What will happen to demand
quantity demand, total if consumer income
revenue and profit if the increase/ decreases due to
price increases? economic expansion or
contractions?

DEMAND
ESTIMATION
 - The process of finding the
DEMAND
current values of demand for
ESTIMATION various values of price and other
determinants.
 JEEPNEY TRANSPORT STRIKE

DEMAND
ESTIMATION
 TECHNIQUES OF DEMAND ESTIMATION

1) Consumer Survey 2) Econometric Method

DEMAND
ESTIMATION
 CONTROLLED MARKET EXPERIMENT
CROSS-SECTIONAL TIME-SERIES DATA
DATA -means that we have
-means that we have data from one unit,
data from many over many points in
units, at one point in time.
time.

DEMAND
ESTIMATION
 UNCONTROLLED MARKET DATA
the details that affect the product that a company
has no way of changing. These include:
DEMAND
ESTIMATION political and economic climates
competitor choices
weather
 ECONOMETRIC METHOD/ APPROACH
The use of statistical techniques and economic
theories in dealing with economic problems.

DEMAND
ESTIMATION
 REGRESSION ANALYSIS
Allows to infer or predict another variable on the basis
of one or more variables.
Line of Best fit
Deals with the frequent questions of cause and effect
DEMAND in business.
ESTIMATION
 OBJECTIVES OF REGRESSION
ANALYSIS
Measure of the influence of one or more variables on
another variable.
Prediction of a variable by one or more variables.
DEMAND
ESTIMATION
 FORMS OF REGRESSION ANALYSIS
SIMPLE LINEAR MULTIPLE LINEAR LOGISTIC
REGRESSION REGRESSION REGRESSION

DEMAND
ESTIMATION
 SIMPLE LINEAR REGRESSION

Model:
Y intercept Slope Coefficient Random Error
DEMAND
ESTIMATION

Dependent Regression Independent

Variable Line Variable
 SIMPLE LINEAR REGRESSION
To determine exactly the straight line that best
describes the relationship between the dependent
into the independent variable.

DEMAND
ESTIMATION
 ORDINARY LEAST-SQUARES REGRESSION

DEMAND
ESTIMATION Objectives :
To determine the slope and intercept that minimize the sun
of the square errors.
 ORDINARY LEAST SQUARE REGRESSION

Estimation Procedure

DEMAND
ESTIMATION
 SIMPLE LINEAR REGRESSION
Example :

DEMAND
ESTIMATION
 REGRESSION ERROR

DEMAND
ESTIMATION
 ORDINARY LEAST SQUARE REGRESSION

Standard Error of the Slope Estimate

DEMAND
ESTIMATION
 MULTIPLE LINEAR REGRESSION
Model:
Y intercept Slopes Random Error
DEMAND
ESTIMATION

Depedent Independent
Variable Variable

To estimate one variable based on several other

variables
 MULTIPLE REGRESSION ANALYSIS
Too complicated by hand!

DEMAND
ESTIMATION
 RESULTS OF A MULTIPLE
REGRESSION ANALYSIS

DEMAND
ESTIMATION
 MODEL SUMMARY

DEMAND
ESTIMATION
 Multiple Correlation Coefficient R -Measures the
relationship/correlation between the dependent variable
and the independent variables.

Explained Variance R²- Indicates how much of the variance

of the dependent variables can be explained by the
DEMAND independent variables.
ESTIMATION
 R-SQUARED (R²)
R² = 0
- MODEL DOEST EXPLAIN
DEMAND
ESTIMATION ANYTHING

R² = 1
- MODEL EXPLAIN EVERYTHING
 Adjusted R² -R² overestimates the coefficient of
determination just when many independent variables are
used.

DEMAND
ESTIMATION
Standard Estimation Error- Indicates by how much the
model overestimates the dependent variable on average.
 R² Example

DEMAND
ESTIMATION
 STATISTICAL VALIDATION
DEMAND
ESTIMATION
 f-Test -To test the null p-Values -Probably of
hypothesis, wether the obtaining a result at least as
variance R² in the extreme as the current one,
population is zero. assuming the null is true

p < 0.05% = statistically significant

DEMAND p > 0.05% = not statistically
ESTIMATION significant

INTERPRETATION OF P-VALUE
Low p - reject null
High p - fail to reject null
 REGRESSION COEFFICIENT

DEMAND
ESTIMATION
 REGRESSION COEFFICIENT
t-Test -how many standard errors the
coefficient estimate is above or below
zero
DEMAND
ESTIMATION
 POTENTIAL PROBLEMS IN
REGRESSION
Omitted Variables
DEMAND Multicollinearity
ESTIMATION Simultaneity and Identification
Heteroscedasticity
Serial Correlation
Durbin-Watson Statistics
FORECASTING

- Process of making predictions of the

future based on the past and present data.
 SIGNIFICANCE OF
FORECASTING
Production Planning
FORECASTING
Resource Planning
Sales Policy
Price Policy
Inventory Planning
 TYPES OF
FORECASTING

FORECASTING
Short Term and Long Term
Demand Forecasting
Passive and Active
Forecast
 TECHNIQUES IN DEMAND
FORECASTING
QUALITATIVE FORECASTING
FORECASTING Expert's Opinion
Delphi Method
Consumer Survey
Market Experiments
Sales Force Composite
QUANTITATIVE FORECASTING
Time-Series Method
Regression Analysis
 TIME - SERIES MODELS
seek to predict outcomes simply by
extrapolating past behavior into the
future.
FORECASTING
TIME-SERIES PATTERN
1. Trend
2. Business Cycle
3. Seasonal Variation
4. Random Fluctuation
 BAROMETRIC MODELS
"leading indicator"
1. Weekly hours of manufacturing workers
2. Manufacturers’ new orders
FORECASTING 3. Changes in manufacturers’ unfilled orders
4. Plant and equipment orders
5. The number of housing building permits
6. Changes in sensitive materials prices
7. Percentage of companies receiving slower deliveries
8. The money supply
9. The index of consumer confidence
10. The index of 500 companies’ common-stock prices
11. Average weekly claims for unemployment insurance
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