Businesses large and small want some kind of insight into the future of their establishments. Larger companies must appease multiple groups, from shareholders to customers and upper management. Smaller companies understand the volatility of the market and the importance of smart financial moves.
One of the main ways businesses succeed is by analyzing market trends, data and influences to make predictions about the future of the company. Prescriptive analysis, specifically, is a useful tool for looking toward the future and making educated decisions. Some online MBA programs include data analysis as an area of focus designed to help management degree candidates understand and make use of analytics tools. Prescriptive analysis, specifically, is a particularly valuable practice.
How Does Prescriptive Analysis Work?
In order to understand how prescriptive analysis works, it is important to look at the other two approaches to analysis in the business world. First, analysis relies on data collection. When enough data, sometimes referred to as “big data,” is available, businesses can begin to detect trends. This is known as descriptive analysis.
Predictive analysis is exactly what it sounds like — making predictions. This type of analysis looks at data sets and breaks them down into useful information. After analysts break down that information and dissect it, they can use the data to make predictions about the future of certain aspects of the company. It is important to note that making predictions does not dictate the future of the business; analytics can illustrate possible outcomes, but they cannot predict the future.
Prescriptive analysis is a type of predictive analysis that looks at the data and creates future scenarios based on particular business needs. For instance, if a business needs to cut costs, prescriptive analysts look at spending data and come up with multiple scenarios for where the business can cut costs.
In an online MBA program, professionals learn how each type of analysis works as well as how to implement them in the business world. Sometimes, one type of analysis is more beneficial than another. These programs help business management degree candidates dissect companies’ needs and determine the best analytic approach.
How Businesses Use the Data
When it comes to prescriptive analysis, businesses use data to create possible outcome scenarios. For instance, they might study social media data, which can include traffic, likes, comments and engagement, to create scenarios. A particular kind of post may generate more engagement than other kinds. Analysts can look at this data and create scenarios illustrating a few changes, such as creating more engaging posts or moving popular content into more heavily trafficked time slots. Analysts can then look at each of these scenarios and determine which would be the most beneficial to the company.
Data analysis is an important tool in the business world today. Without it, businesses are virtually blind. Using the data available to predict and determine possible outcomes helps businesses stay healthy. One of the most important skills a person in leadership can have is understanding the importance of data analysis and how to implement it.
Learn more about the UTC online MBA with Business Analytics Concentration program.
Have a question or concern about this article? Please contact us.