Question

Describe any other major developments that are assumed in creating financial projections (such as strategic partnerships, competitive situation, etc)

Answer 1

Major developments that are assumed in creating financial projections are – successful or unsuccessful introduction of a new innovative product, favorable or unfavorable conditions due to change in regulatory framework, change of competitive pressure etc.

While creating financial projections one of the major developments that can be assumed is the introduction of a new innovative product. Companies in industries like the pharmaceutical industry or the electronics industry are constantly investing in R&D (research and development). Companies in these industries will stand to gain a lot if they are able to successfully launch a new innovative product and such an event will have a significant positive impact on its financial projections.

Similarly another development that can be assumed is favorable or unfavorable conditions due to change in regulatory framework. Many industries have to operate their business under regulatory guidelines. For instance the pharmaceutical industry operates under regulatory framework for patents and pricing. Any possibility changes in regulatory framework should be incorporated in the projections.

Competitive scenario will change and the competitive pressure can either increase or decrease going forward. This assumption will also have to be incorporated in financial projections.