Business Analytics > Foundations of Business Analytics > Major Components of Business Analytics

Business analytics begins with the collection, organization, and manipulation of data and is supported by three major components:

Descriptive Analytics: Descriptive analytics focuses on understanding past and current business performance. It summarizes data into reports, charts, and dashboards about sales, revenue, costs, or customer complaints. Managers use it to review performance, identify problems or opportunities, and find patterns and trends. It also helps grouping customers into segments for targeted marketing.

Predictive Analytics: Predictive analytics uses historical data to forecast future outcomes. It looks for patterns and relationships in data to predict trends, demand, risks, or customer behavior. For example, it can predict customer response to ads, future product demand, price changes, loan defaults, or fraud risk. 

Prescriptive Analytics: Prescriptive analytics recommends the best possible actions. It uses optimization and advanced models to choose the best option among many alternatives. It is used for pricing decisions, production planning, scheduling, supply chain design, and investment choices.

 

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