6 importance of business analytics

What is business analytics? Business analytics includes exploring and investigating the past and present data to reach an efficient strategy for a business firm. The key elements of business analytics are:? Optimization? Statistical Analysis? Quantitative and Qualitative Analysis? Predictive Models Types of business analytics Descriptive Analytics- Describing past and present occurrences along with the reason for them. Predictive Analytics- Predicting the consequences of the actions taken by a firm. Discovery Analytics- Discovering correlations and patterns among the variables using data analysis. The analysis should be done with both primary and secondary data. Prescriptive Analytics- Prescribing the actions that should be taken by a firm. Thus, to form a prescription or a strategy for a firm, we use the results from the first three types of business analytics- descriptive, predictive and discovery. Why is it important? 1. It helps in making an economical and efficient decision, thus improving the profitability of a firm. Cashflows, working capital, borrowings, etc. need to be well-managed for the sustainable growth. Business analytics leads to management of all funds with expertise. 2. It enhances the revenue records of a firm by attracting new customers. It helps in attracting new investors too. The prospective clients look into the quality of the products and services offered by a firm and compare it to other firms producing the substitutes of those goods and services. With business analytics, firms come up with their final strategy only after a careful analysis of the other firms' performance. 3. The average returns expected to a shareholder increases, therefore, investing in the firm becomes desirable for potential investors. With business analytics, firms use cost-effective and profit maximizing strategies for which the returns to shareholders accelerate. 4. Creation of comparative advantage- As the firms explore the primary and secondary data, they gain a comparative advantage against other firms. This data is available to all the firms, but utilized by only a few. With the application of lessons learned from past trends, the operational efficiency of all the departments in a firm increases. 5. Risk aversion via business analytics-Several risks are associated with the running of a business. These risks include operational risks, human risks, asset loss risk and technology risks among others. These risks can be averted using business analytics. The firm can catch frauds and misuse of funds at an early stage with the use of business analytics. 6. Competitor's analysis-By knowing about the strengths and weaknesses of its competitors, a firm can be well-prepared to handle any kind of situations. Step 1: Identifying competitors Step 2: Knowing the goals and objectives of the competitors Step 3: Tracking the ongoing strategy of the competitors Step 4: Estimating the reaction time and intensity of the reaction of the competitors (for example, to a product price change or a new advertising strategy of the firm). A firm should also know when to react to a competitor's actions and when not to. In the case of receiving threats, a firm should be able to analyze whether a threat is credible or not using business analytics. In this fast-paced world with increasing competition and multiple products and services of the same being available, and to be able to survive and succeed, a modern solution is the use of business analytics.