The S-curve is a curve that depicts the growth of one variable such as costs, expenditures or man-hour against another variable which is usually, time. The S-curve is mainly crucial in helping one understand; the importance of monitoring the progress and growth of their projects over a given period, in order to assess the stage of the project and predict its end (Porter, pg105). The S-curve is, therefore, a comparison of the projected time and costs and or expenditure towards the completion of the project against the actual time and cost of the project (Porter, pg109). This paper looks at why S-curves are employed as tools to project the future of consumer demand, and, why the 10-% market penetration point is regarded as pivotal to successful forecasting when applying S-curves.

The S-curve is a forecasting tool that is mainly used to assess, and, forecast costs and the market for the industries. The s-curves are useful tools as they make it easy to track the growth or contraction of the market and in this case the consumer demand. The S-curves have a baseline and the target S-curves that are used for analysis of the market. These two S-curves reveal the market range and are very useful when the company makes strategic plans to change their project’s scope, and, resource allocation (Porter, pg117).

In addition, the S-curves are essential in determining slippage that is the amount of time that a task has been delayed or overdue from its earlier scheduled date or the baseline schedule. In the case of consumer demand, the firm may have forecasted the consumers to have bought their products within one month in the market (Porter, pg119). The S-curve is an excellent tool in measuring the slippage if the product takes more time to sell in a given period. The S-curve is very effective in planning in advance as it is evident from the slip in the target S-curve as compared to the baseline S-curve. As a result, the management may be forced to either increase the time allocated for a particular task if the slippage cannot be reduced to a manageable level (Porter, pg121).

The s-curve is also critical in assessing and determining the progress of the project. The S-curves offer a picture of the on-going progress of the project as a comparison of the target S-curve, and the actual S-curve reveals whether the project is on track (Porter, pg129). However, the two curves cannot converge in any case due to factors such as delays in updating the production but, towards the end of the project the curves start converging as most of the data is collected. It is also important to note that, there should not be a huge gap between the actual and the targets curves as this is as a sign of possible delays in the project. For consumer demand that does not require a production schedule the two curves must be seen to be close to each other and converging as the project gets closer to the end of the targeted days.

The S-curve as a tool for measuring market growth potential clearly states that; when a product is released to the market the time required to gain 10-% market share is approximately the same as that required to move from 10% to 90-% penetration rate (Porter, pg137). In practice this means that if it takes duration of ten years for a product to get 10-% penetration rate it would approximately take 10 years, for the product to gather 90-% market acceptance. The S-curve is a tool for forecasting and, as a result, this theory establishes a core part of the forecasting parameters in order for the estimated figures to be realistic and have a degree of accuracy. It sets the level of expectation for companies in a given industry in the case that they face high levels of technological change such as; the mobile phones industry where companies have to constantly reinvent their products to match their competitors, this may not be accurate and may take more time (Porter, pg141). However, the theory allows for companies to plan strategically for their products using the S-curve with this assertion allowing for better and well-structured plans.

The S-curve is an estimation and forecasting tool for that is compared with the actual values to get a comparison that helps a company strategize. This theory is essential in drawing a realistic baseline and target S-curve that may help the company assess itself. The historical data and trends available are used together with this theory to derive a realistic S-curve and also to examine the records on the trends in relation to this theory. As a strategy tool, the S-curve needs to have a strong and proven basis and this rule is essential in forming a good argument supported by researched evidence (Porter, pg140). Although the tool may in some cases not meet the target with perfect precision due to technical problems and other market forces, it is correct, although not implicit in all cases.

In conclusion, the S-curve is a valuable tool for forecasting for any industry and companies that use the tool are at an advantage as they are able to manage their resources efficiently. It is an important tool for all companies while making strategic plans to venture in the market and highly recommended as it offers an insight on the expectations of the company in the market, therefore, ensures proper planning and utilization of resources.

Works Cited

Porter, Michael E.. Competitive strategy: techniques for analyzing industries and competitors. New York: Free Press, 2000. Print.