Economics for Healthcare Managers
Refer to Chapter 9, Case 9.2 (pages 147-148) from the E-Book, Economics for Healthcare Managers, Fourth Edition by Lee, provide a response to each of the discussion questions:
Case 9.2 Mistakes to Avoid When Making Forecasts Business plans require a sales forecast.
Scott Fishman, the CEO of Envisage, sees three common mistakes in business plans: • They forecast “hockey stick” revenue growth, • They forecast smoothly rising trend lines, • They lack convincing evidence of market size.
A “hockey stick” forecast—a revenue graph shaped like a hockey stick—involves limited revenues initially followed by explosive growth. It is a potentially effective sales technique to use in discussions with executives and investors because it suggests that the business opportunity might be extremely valuable. In contrast, smoothly rising trend lines do not seem plausible from an economic standpoint. The number of customers and their consumption of any product is typically finite. Furthermore, any true blockbuster product will attract competition. Every new product faces a complex environment: features and benefits, competitive environment, regulatory conditions, payment models, distribution, pricing, market positioning, and so forth. A genuinely new product will have multiple unknowns in its market. If there are no unknowns, it is not really a new product. A convincing forecast demands market research, an honest recognition of what is not known, and a strategy for resolving some of the unknowns.
What is problematic about a “hockey stick” forecast?
Can you find an example of a product that displayed “hockey stick” revenue growth?
What is problematic about a forecast with a smoothly rising trend line?
Can you find an example of a product that displayed smoothly rising revenue growth?
From an economic point of view, what is implausible about smoothly rising trend lines?
Can you find an example of a product that wildly underperformed early forecasts?
Can you find an example of a product that wildly overperformed early forecasts?
What external factors might cause below-forecast sales? Above forecast sales?
What internal factors might cause below-forecast revenues? Above forecast revenues?
What are examples of new products with uncertain prospects in healthcare?
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
