Where a forecasting mistake can land a food company in hot water
Forecasting decisions can often be a vital part of running a food business. Companies involved in production must forecast their anticipated purchases from suppliers, while large public companies must forecast their projected earnings to shareholders. An incorrect forecast can have significant ramifications down the supply chain. The Australian Federal Court recently took the relatively rare measure of ordering the former managing director of Murray Goulburn to personally pay a $200,000 penalty in relation to misleading market forecasts made by Murray Goulburn. This article explains what can go wrong when forecasts are deficient or made without a proper basis, and explores the legal consequences this can bring upon a food company and even its directors.