Learning about the competition includes estimating the portion of the market that each competitor holds. Market size is the total sales per year for a specific product held by all the competing businesses. Market share is the percentage of total sales in a market held by one business. Market potential is the maximum number of customers and amount of sales that can be generated from a specific segment in a defined timeframe. Sales Analysis Revenue is the money that a business makes from the goods and services it sells. Revenue is also called income or sales. A sales analysis shows whether sales are increasing or decreasing in an organization and helps determine future sales goals. Before sales goals are created, the sales history for the company must be analyzed. Sales history is stored in the management information system of the company and is usually updated every day. A Management Information System (MIS) is an integrated system of computer hardware and software that gathers information and presents it in a manner to be used in the decision-making process. MIS is discussed in depth in Chapter 4. Based on current and historical information, managers can plan and forecast sales for coming years. By evaluating past performance, future performance can be projected. Sales forecast, or projections, is a prediction of future sales based on past sales and a market analysis for a specific time period. The sales and executive teams create these forecasts. Sales forecasts are typically made for a minimum of one year to three to five years in the future. The best opportunities are reviewed for making new and repeat sales. Opportunities to take business away from the competitors, expand into new geographic areas, and other potential sales sources are also identified. Section 3.1 Review Check Your Understanding 1. Identify examples of benefits that can result from the planning process. 2. Cite elements of a SMART goal. 3. List examples of types of plans written by management. 4. State the difference between internal and external factors that affect an organization. 5. What is a competitive advantage? Build Your Vocabulary As you progress through this text, develop a personal glossary of key terms. This will help you build your vocabulary and prepare you for a career. Write a definition for each of the following terms and add them to your personal glossary. goal SMART goal strategic plan tactical plan operational plan contingency plan market research primary research secondary research competition competitive analysis revenue Management Information System (MIS) sales forecast Principles of Management 44 Copyright Goodheart-Willcox Co., Inc.