IPS Academy

Institute of Business Management & Research

Indore (M.P.)

“Internal Exam Assignment: OCT.2024”

MBA FT 3nd semester
Sec.: A
Computer Code: 65081
Date: 03/11/24
INTRODUCTION TO BUSINESS ANALYTICS

Submitted By: Submitted To:

Priyanka Giri SANJU SIR

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Ans: The act of gathering, evaluating, and interpreting data in order to enhance
and inform company decision-making is known as business analytics. To glean
valuable insights from data, it combines statistical analysis, data mining,
predictive modelling, and optimization techniques.

Generally, there are three primary categories of business analytics:

1. Descriptive analytics: Uses historical data analysis to explain what has

occurred.

2. Predictive analytics forecasts future patterns based on historical data by

using statistical models and machine learning techniques.

3. Prescriptive analytics: Makes suggestions for what to do based on

predictions and insights gleaned from data.

Business Analytics' Importance in Contemporary Business Decision-

Making

1. Data-Driven Decision-Making: Large volumes of data are handled by

contemporary enterprises. By converting unprocessed data into useful
insights, business analytics helps organizations make well-informed
decisions instead of depending on instinct.

2. Increasing Operational Efficiency: By identifying operational

inefficiencies, analytics assist companies in streamlining procedures, cutting
expenses, and raising output.

3. Improving the Customer Experience: Businesses may better satisfy and

retain customers by customizing their goods and services based on an
analysis of their behaviour and preferences.

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4. Risk Management: Businesses can improve their risk management by using
predictive analytics to anticipate possible risks and create mitigation plans.

5. Competitive Advantage: Businesses that use business analytics well can

spot market trends and opportunities faster than their rivals, giving them a
competitive advantage.

6. Strategic Planning: By offering data-supported insights on possible

outcomes, business analytics helps guide long-term strategic decisions like
product development, market entry, and resource allocation.

In the current in today's data-driven world, business analytics is essential for

organizations looking to boost productivity, stay competitive, and adjust to
shifting market conditions.

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Ans: By offering suggestions on the optimal course of action based on data

analysis, prescriptive analytics plays a critical role in streamlining corporate
operations. It focuses on finding the best methods or solutions to accomplish
desired results rather of merely projecting future events, as is the case with
predictive analytics. Prescriptive analytics assists firms in making decisions that
optimize possibilities or minimize risks by utilizing sophisticated approaches
including machine learning, simulations, optimization models, and decision
analysis.

Prescriptive analytics' function in streamlining business procedures

1. Decision Support: Prescriptive analytics offers specific actionable

suggestions. For instance, by recommending the most effective course of
action based on the facts at hand, it can assist companies in determining the
optimal pricing plans, inventory levels, or resource allocation.

2. Process Optimization: By examining various factors and limitations,

prescriptive analytics may spot inefficiencies and offer solutions to improve
productivity, cut expenses, and streamline processes. For example, it might
streamline supply chain logistics to cut down on delivery times and
transportation expenses.

3. Scenario Analysis and Simulations: To comprehend the possible effects

of various choices, businesses might perform "what-if" scenarios.
Businesses can use prescriptive analytics to model different approaches and
select the one that produces the greatest results

4. Personalization and Customization: By examining consumer behaviour

and suggesting tailored solutions, prescriptive analytics assists companies
in customer-facing sectors in providing individualized services or goods.
Based on consumer information, it can suggest tailored promotions in
marketing, for instance.

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5. Risk Mitigation: It also helps in foreseeing possible hazards and
suggesting safeguards. This is very helpful in risks can be expensive when
making financial decisions or managing a supply chain.

The Distinction Between Prescriptive and Predictive Analytics The main

areas of difference between predictive and prescriptive analytics are their
goals and results. The goal of predictive analytics is to use previous data to
estimate future trends or events. In order to find trends and estimate future
events, like sales or consumer behaviour, it makes use of statistical models,
machine learning, and data mining techniques. Prescriptive analytics, on the
other hand, takes one step further by suggesting certain activities to attain
the greatest possible outcome in addition to forecasting alternative
outcomes. To provide the best tactics or answers, it makes use of
simulations, decision models, and optimization algorithms. Although
predictive analytics offers information on Prescriptive analytics is more
proactive in nature since it provides direction on what choices or steps to
take in order to maximize results in future scenarios.

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Ans: By assisting businesses in better understanding client preferences,

anticipating needs, and optimizing service delivery, business analytics plays a
critical role in improving the customer experience. Businesses in the e-
commerce and service sectors can establish individualized, effective, and
seamless interactions that increase client happiness and loyalty by utilizing data-
driven insights.

1. Customization

By examining individual behaviour patterns, preferences, and purchase

histories, business analytics helps companies to customize client experiences.
Predictive analytics-powered recommendation algorithms are used in e-
commerce sites such as Amazon to make product recommendations based on a
customer's browsing and previous purchases. This customized strategy increases
client happiness and encourages repeat business by making purchasing more
interesting and relevant.

2. Recognizing Client Needs

Businesses can be proactive in providing services by using analytics to forecast

future client needs.
To improve the viewing experience, Netflix, for instance, use predictive
analytics to make content recommendations based on a user's viewing habits
and history. Businesses in the food delivery industry, such as Uber Eats, use
analytics to make timely and pertinent meal recommendations based on past
orders and the time of day.

3. Improving Customer Service

By examining consumer interactions and comments, business analytics may

enhance customer service. To find reoccurring problems or pain areas, for
example, service-based businesses employ sentiment analysis on customer
evaluations and support correspondence. By using this data, telecom businesses
can proactively address frequent issues or modify their services, increasing
customer satisfaction and lowering attrition rates.

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4. Enhancing the User Experience (UX)

E-commerce requires analytics for improving the user experience of apps and
websites. Businesses monitor user activity, including session length, click-
through rates, and navigation patterns, to determine areas where clients may be
having issues. For example, Zappos makes use of this data to enhance the layout
and usability of their website, guaranteeing a more seamless checkout
experience and lowering cart abandonment rates.

5. Instantaneous Interaction

Businesses may interact with clients more successfully at pivotal points in their
purchasing journeys thanks to real-time analytics. E-commerce platforms can
increase conversion rates by providing real-time, tailored discounts or
promotions depending on user browsing activity. In order to improve the visitor
experience and foster greater brand loyalty, hotels such as Hilton use real-time
data to provide room upgrades or exclusive offers throughout the reservation
process.

6. Retaining Customers and Loyalty initiatives

For loyalty programs to be designed and optimized, business analytics is

essential. Businesses can develop more pertinent incentives and rewards by
examining the preferences and purchase patterns of their customers. Starbucks
offers individualized discounts and promotions to its loyalty program members
based on customer data, which promotes brand loyalty and repeat business.

In conclusion, businesses in the service and e-commerce sectors may provide

proactive, effective, and customized client experiences thanks to business
analytics, which eventually raises customer satisfaction and retention rates.

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Ans: Businesses use descriptive analytics to find trends and patterns in their
data and to comprehend historical performance. Businesses can learn more
about consumer behaviour, market dynamics, and operational efficiency by
compiling historical data using a variety of tools and methods, such as data
aggregation, visualization, and statistical analysis. By using descriptive
analytics, businesses can identify patterns that guide their future plans and
provide answers to queries like "What happened?" and "How did it happen?"

Methods by Which Companies Employ Descriptive Analytics to Spot Patterns

and Trends1. Data Summarization and Aggregation
In order to highlight important indicators like sales growth, customer
demographics, and inventory levels, descriptive analytics collects data from
multiple sources and summarizes it. For instance, an online retailer may
compile daily sales information to spot patterns during periods of high demand
seasonal variations in sales or preferred product categories.

1.This enables them to schedule marketing initiatives and inventory around

times of strong demand.

Using Dashboards and Reports to Visualize Data

Dashboards and other visualization tools give companies an easy-to-understand
method of seeing patterns in their data. To track store performance, for
example, a retail chain may employ visualizations like bar charts and line
graphs, emphasizing trends like monthly sales growth or variations in foot
traffic among locations. This enables the business to pinpoint failing locations
and take appropriate action to increase sales.

Segmenting customers Businesses can divide up their clientele according to

demographic, behavioural, or geographic information by using descriptive
analytics. Businesses are able to customize their marketing tactics by
recognizing trends within these segments. For instance, a telecom business may
divide clients into high- and low-data users based on use data, then send tailored
offers to each category. New consumer preferences or wants, like a growing
desire for data-heavy services, may be identified by this segmentation.

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 Monitoring Consumer Behaviour Companies follow customer journeys using
descriptive analytics to find common patterns of behaviour that result in
conversion or abandonment. An online store, for instance, might examine
website statistics to determine the point in the purchasing process where
consumers are most likely to abandon the site. They might spot a pattern where
buyers regularly leave their carts empty at the payment stage, indicating that the
checkout procedure needs to be made simpler.

Examining Past Performance Businesses can identify long-term trends in

their operations or finances by looking at historical data. A For instance, a
manufacturing organization may examine production data spanning years to
identify patterns in equipment failures or product flaws. To lessen future
problems, this research can reveal trends that point to the necessity of process or
equipment modifications.

Identification of Market Trends Descriptive analytics can be used by

businesses to examine industry patterns and more general market data. For
instance, a fashion retailer may use purchase data analysis to uncover trends in
client preferences and track the popularity of specific styles or colours over
time. This enables them to modify plans for product development and inventory
to meet changing market demands.

Descriptive analytics examples in action• Retail Sector: A supermarket chain

may examine weekly sales data using descriptive analytics to spot patterns in
product demand, like rising sales of seasonal goods, such as pumpkin spice
products in the fall or ice cream in the summer. They are better able to organize
promotions around popular items and manage inventories as a result.
Healthcare: To spot trends in admissions, such a spike in flu cases during
particular months, a hospital could examine patient data. This would aid in the
distribution of resources, guaranteeing that they have more personnel and
materials on hand during periods of high demand.

Financial Services: To analyse consumer transaction data and spot patterns

like rising mobile banking usage, a bank may employ descriptive analytics. In
order to adapt to shifting consumer tastes, they can now concentrate on
improving mobile platforms and providing digital-first services.
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To sum up, descriptive analytics assists companies in identifying important
trends and patterns in their past information, allowing them to plan for the
future and make better decisions. Businesses may better understand historical
performance and take action based on the insights they obtain through
segmentation, aggregation, and visualization.

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QUES5

Ans: A statistical method called Least Squares Prediction (LSP) is used in

predictive analytics to estimate future events and analyse correlations between
variables. Its foundation is the Least Squares Method, which reduces the sum of
the squared discrepancies between the values predicted by a linear regression
model and the actual data points. Businesses may develop more accurate
forecasts by using LSP to find trends, patterns, and relationships in historical
data.

Regression models, in which one variable (the dependent variable) is predicted

based on one or more independent variables, are frequently constructed using
LSP in predictive analytics. The technique fits the data points to a line (or plane,
if there are several variables) so that the total discrepancy between the real data
and the Predictions from the model are reduced.

The Operation of Least Squares Prediction (LSP)

1.Compile Historical Data: Compile information on the relevant variables. In a

business context, for instance, this could comprise customer information,
marketing budgets, or sales numbers.

2.Determine Relationships: Create a linear link between the independent

variables (the elements affecting the prediction) and the dependent variable
(what you wish to predict).

3.Model Building: A regression line is fitted to the data using the least squares
approach. Based on the available independent variables, the line shows the best
estimate for the dependent variable.

4. Error Minimization: LSP ensures that the model produces the best accurate
predictions feasible given the data by minimizing the total squared differences
between the actual observed values and the values predicted by the regression
line information.

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Prediction: By using the relationship found in the past data, the model may be
used to forecast future events once it has been constructed.

An Illustration of Least Squares Forecasting in a Business Setting Think about a

retail business that wishes to predict future sales by analysing its advertising
expenditures. The company has historical data on monthly marketing
expenditures and the associated sales numbers. A regression model that
forecasts future sales based on advertising expenditure can be constructed using
LSP.

1. Data Collection: Over the previous two years, the business has gathered
monthly data on sales income (a dependent variable) and advertising spend (an
independent variable).

2.Determine the association: They determine the association between

advertising spend and sales using the least squares method. The regression line
illustrates how sales typically rise in tandem with increases in advertising
expenditures.

3.Model Building: To minimize the discrepancy between actual and anticipated

revenues, the business fits a regression line using LSP. For instance, the model
may discover that sales rise by $5,000 for every $1,000 spent on advertising.

4.Prediction: Based on anticipated advertising expenditures, the business may

now forecast future sales using the regression model. Based on the association
discovered in the past data, the model forecasts the corresponding rise in sales if
they intend to spend $50,000 on advertising the next month.

Refinement: The model can be improved over time by incorporating additional

factors (such as market circumstances or seasonality) or by making adjustments
in response to fresh data, enabling the business to produce more accurate
projections.

Least Squares Prediction in Business Applications

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 Sales Forecasting: Using variables including marketing expenditure,
seasonality, and economic conditions, businesses utilize LSP to forecast future
sales.
.2. Demand Forecasting: By employing LSP to examine past sales data in
connection to factors like pricing, promotions, and consumer trends, retailers
can forecast future product demand.

3.Budgeting and Financial Planning: By analysing past financial performance

and the effects of important factors like cost reductions or revenue growth,
financial teams can use LSP to forecast future revenue, expenses, or profit
margins.

consumer Lifetime Value (CLV): By using historical data to forecast

consumer spending patterns, LSP assists businesses in determining each
customer's long-term worth and allocating resources to increase retention.

In conclusion, by reducing the mistakes in projecting future events based on

historical data, Least Squares Prediction assists companies in creating predictive
models. Businesses may make data-driven decisions in areas like sales,
marketing, and financial planning thanks to its use in predictive analytics, which
results in more precise and knowledgeable company plans.

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QUES6

Ans: Two of the most popular tools in business analytics are SAS (Statistical
Analysis System) and SPSS (Statistical Package for the Social Sciences), each
of which has advantages and best practices. Although complicated data analysis
is the goal of both software programs, their features, usability, and the kinds of
companies or sectors that typically employ them vary.

Overview and Features of SPSS

1. Usability: SPSS is renowned for its intuitive user interface, which enables
users with little to no programming experience to utilize it. It provides a
graphical user interface (GUI) with point-and-click capabilities that enables
users to carry out intricate statistical analysis.

2. Emphasis on Statistical Analysis: Although SPSS is widely used, its

primary focus is statistical analysis, especially for the social sciences used
for predictive modelling, descriptive statistics, and survey analysis in
business.

3. Data Management: SPSS is perfect for activities like factor analysis,

regression analysis, and cross-tabulation because of its proficiency in
handling and evaluating structured data. It is particularly helpful for
analysing survey data, academic research, and consumer satisfaction
surveys.

4. Integration: SPSS easily imports and exports data because to its good
integration with programs like Microsoft Excel and other data management
systems.

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5. Learning Curve: SPSS has a relatively flatter learning curve than SAS,
making it a popular option for novices and anyone working in academic or
marketing research settings.

Overview and Features of SAS

1. Advanced Analytics and Programming: SAS is a completer and more

potent tool that provides insights like predictive modelling, optimization and
machine learning. It is made to manage complicated data analysis procedures
and huge datasets.

2. Flexibility and Scalability: SAS is renowned for its adaptability, especially

when handling intricate statistical models and large data sets. It is perfect for
companies with high data requirements, such manufacturing, healthcare, and
financial services, because it can manage large-scale data processing.

3. Customizable: Because SAS employs its own programming language, it

necessitates a greater comprehension of programming. As a result, it has
more customization options and may produce more specialized analytics
models.

4. Industry Use: SAS is extensively utilized in sectors that demand

sophisticated predictive modelling, risk analysis, and compliance reporting,
such as government, healthcare, and finance. Additionally, it's frequently
used to detect fraud supply chain efficiency as well as sophisticated financial
forecasting.

5. Data Management and Integration: SAS handles both structured and

unstructured data from a range of sources and offers exceptional data
integration capabilities. Businesses may conduct sophisticated data analytics
on enormous datasets thanks to its support for big data analytics and
integration with contemporary technologies like Hadoop.

Situations in Which SAS Is Most Beneficial

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• SAS is excellent at large-scale data analytics.
in settings like banks that analyse transactional data for risk management or
fraud detection, which entail big datasets and intricate models.• Advanced
Predictive Modelling: SAS's capabilities will be advantageous to companies that
need machine learning, predictive analytics, or optimization (for example,
supply chain management or financial forecasting).• Compliance and
Regulatory Reporting: SAS's strong reporting and compliance capabilities are
crucial for sectors with stringent regulations, such as healthcare and finance.

In conclusion

SPSS is widely used in academic research and by corporate users who are
interested in basic data analysis and reporting since it is best suited for users
who require simple statistical analysis with little coding. However, SAS is more
appropriate for larger businesses with intricate data requirements that call for
sophisticated analytics.

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