MITS6002 Business Analytics
Assignment 3
Q1. Carefully Read the “CommBank Retail Business Insights Report FY18” provided with this
as an attachment and answer the below questions.
i. Comment on the insights report based on the overall features; including the
quality of visualisations, presentability, and the information provided.
ii. List the key information you derive from this insights report and explain how
they will be useful in decision making.
iii. Write an abstract (one paragraph) summarising the insights report.
iv. Suggest improvements to this insights report.
Q2. Regression analysis is a commonly used technique to find relationships among
variables. Answer the below questions based on regression analysis.
i. Provide an example where regression analysis can be effectively used.
ii. Collect height and weight data from 10 friends
elatives of yours and complete
the below table. Every student in class should have a unique set of values.
Height Weight
iii. Draw a scatterplot based on above data. Based on your plot comment on the
elationship between height and weight.
iv. Compute the equation of the regression line.
v. Calculate the R2 value and comment on the goodness of the fit.
https:
www.commbank.com.au/content/dam/commbank
usiness/pds
etail-business-insights-report-fy18.pdf
vi. Use an analytics tool of your choice to calculate the values for iv, and v. Compare them
with your answer.
Q3 Classification and regression are commonly used processes in business analytics.
i. Briefly explain the difference between classification and prediction.
ii. Give examples for classification methods you know.
iii. The following diagram shows a neural network with one hidden layer.
Write down the alge
aic equation for y1 in terms of input values i1,i2 and weights w.
Briefly explain how neural networks are used for classification.
iv. Give at least three examples how clustering can be used in business analytics. In your
answer explain how each business case could be addressed using clustering.
CommBank
Retail Business
Insights Report FY18.
2
Overview
The Australian retail sector continues to respond to a range of
competitive pressures and a desire to drive efficiencies within their
usinesses, to maintain or grow their performance. As a result,
etailers appear to be increasingly adopting an innovative mindset to
ensure they maximise available opportunities, leverage technology
and enhance the customer experience. While many retailers
are generating a substantial and timely return from investing in
significant change within these areas, there are others yet to harness
the financial and intangible benefits that innovation can deliver.
State of innovation – retail industry vs national average
Innovation Index – retail industry vs national average
19% 9% 16%
2%
4%
2%
30% 39% 35%
49% 48% 47%
Retail FY17 Retail FY18 National FY18
Disruptors
Harnessers
Adopters
Resistors
National FY18
Retail FY18
Retail FY17
29.5
32.0
26.2
100
75
50
25
0
-25
-50
-75
-100
Innovation Active
Have Not Implemented Change
Abandoned Innovation
Improvers (Improve But Don’t Innovate)
CommBank Retail Business Insights
87%
of retailers are either
Innovation Active
or Improvers
About the Retail Business Insights Report
The CommBank Retail Business Insights Report is based on a sub-
set of a wide-ranging quantitative survey of 2,473 business owners,
decision makers and managers, as well as 16 in-depth qualitative
interviews. This sub-set comprises responses from 262 retailers within
sectors including homewares and hardware, clothing and footwear,
food and liquor, and other retail.
The survey was conducted on behalf of the Commonwealth Bank by
DBM Consultants between August and October 2017 and analysis by
ACA Research between October and December 2017. Participants were
drawn from businesses across Australia with an annual turnover of
more than $500,000 and at least two employees. Additional analysis
on this data set was conducted in December 2017 to January 2018.
The CommBank Innovation Index measures 15 core elements of
innovation across management capability and entrepreneurial
ehaviour. The index combines the results into a single numerical
indicator to rank businesses on a scale from –100 (innovation
estrictive) to +100 (disruptive innovation), creating the concept of an
innovation curve or spectrum.
For further information on our tool and methodology see page 7
of the National Business Insights Report FY18 available at
commbank.com.au
usinessinsights
3
State of innovation - retail channel
Innovation Index – retailers by location
18%
5% 4%
7%
5%
51%
59%
20%
24% 36%
71%
Bricks & Mortar Pure Play Online Multichannel
Innovation Active
Have Not Implemented Change
Abandoned Innovation
Improvers (Improve But Don’t Innovate)
Metro
31.9* 2016: 27.6*
Regional
21.6* 2016:
21.8*
National: 32.0 National: 32.2
Regional retailers tend to be smaller, are more risk averse
and have less of a focus on networking.
QLD
40.6*
NSW / ACT
26.5*
VIC / TAS
32.0*
SA / NT
29.4*
WA
24.9*
2016:
25.5*
All industries:30.8All industries: 26.7
All industries:
34.7
All industries:
29.4
All industries: 37.7
2016:
28.9*
2016:
30.9*
2016:
N/A
2016:
N/A
* Caution, low base size
(below n=75), results are
indicative only
Innovation
performance
While the overall rate of innovation
within the Australian retail sector
has remained steady over the
past 12 months, we have seen a
moderate uplift in the presence
of entrepreneurial behaviours and
capabilities that support innovation
(as measured by the CommBank
Innovation Index).
However, despite maintaining
innovation activity, and increasing
adoption of many behavioural traits
that foster innovation, retailers
have now fallen behind the national
average. It is clear that innovation
activity is at its highest among multi-
channel retailers, falling dramatically
when you consider pure play online
and even more so for
icks and
mortar only operators.
CommBank Retail Business Insights
71%
of multichannel
etailers are
Innovation Active
4
While retailers have further
embedded a range of behaviours
and capabilities that enable
innovation over the past year,
they are less inclined than the
average of all industries to look
for and respond to opportunities,
incorporate innovation into
their staff hiring and evaluation
processes, or be willing to take
isks on uncertain ventures.
The top drivers of innovation
and improvement for retailers
– productivity, leveraging
technology and growth – align
with expected benefits, with
etailers focused on enhancing
outcomes for customers, raising
competitiveness and internal
processes. However, with only
a fraction of retailers looking to
innovate in response to their
customer’s direct feedback or
observed behavioural changes,
and an even smaller number
innovating to stave off industry
disruptors, there appears to be
unrealised opportunities for
etailers to leverage innovation to
etter adapt to change.
Innovation behaviours of retailers
Drivers of innovation and improvement for retailers
The dynamics
of innovation
68%
69%
72%
75%
78%
41%
44%
46%
47%
57%
Willing to spend time as well as caital on uncertain ventures
Willing to put financial security on the line and take risks for an idea
Actively looking for creativity and innovation skills in the hiring process
Using formal process to network outside the company
Evaluating employee creativity or innovation skills as part of appraisal
Cultivatin new ideas by giving employees opportunities to observe
Expect employees to offer creative ideas for how the company could improve
Looking for new ideas or ways to benefit from changes in the market or technology
Encouraging employees to ask questions that challenge
Adapting products and services to make the most of opportunities
28%
29%
30%
30%
38%
10%
10%
15%
17%
Adapting products and services to make the most of opportunities
Encouraging employees to ask questions that challenge
Looking for new ideas or ways to benefit from changes in the market or technology
Expecting employees to offer creative ideas for how the company could improve
Cultivating new ideas by giving employees opportunities to observe
Evaluating employee creativity or innovation skills as part of appraisal
Using formal process to network outside the company
Actively looking for creativity and innovation skills in the hiring process
Willing to put financial security on the line and take risks for an idea
Willing to spend time as well as capital on uncertain ventures
Improving efficiencies or productivity
Needing new avenues for growth or revenue
Taking advantage of new or emerging technology and solutions
Keeping up with what competitors are doing
Improving the quality of offering
Feedback from customers
Observing changes in customer needs
Changing nature of the workforce
Protecting against disruptors in the market
Top innovation behaviours for retailers
Least prevalent innovation behaviours for retailers
Top drivers of innovation and improvement for retailers
Least prevalent drivers of innovation and improvement for retailers
Perceived benefits of innovation and improvement
for retailers
Improved market position
Better outcomes for customers
Improved efficiencies
Increased productivity
Better competitive advantage
38%
35%
34%
30%
29%
Challenges of innovation and improvement for retailers
Lack of time dedicated to implement these changes
Lack of human resources or personnel
Lack of financial resources
Lack of skills
Difficulty quantifying the returns of investment 16%
20%
25%
28%
32%
of retailers are
adapting their
offering to
make the most
of opportunities
78%
CommBank Retail Business Insights
5
Areas of investment
6%
10%
11%
14%
16%
21%
31%
41%
48%
13%
18%
16%
20%
12%
16%
36%
36%
36%Sales and marketing
Staff training and expertise
Technology
Buying or renovating premises
Supply chain and logistics
Modified internal management structure
Customer centricity
Research and development
Domestic or international expansion
Retail FY18
National FY18
In line with high levels of
marketing activity occu
ing
within the industry, retailers
are most likely to invest in
innovative sales and marketing
approaches. Staff training,
store renovations and supply
chain enhancements are also
high priorities while investment
in technology, research &
development and customer
centricity lags behind the
national average.
For those retailers that are
investing in technology, it is
not surprising that the top
priority is their website or digital
presence and payment systems.
Investment in the Internet
of Things is also well above
the national average while
investment in cloud technology
is significantly below.
Investment
in innovation
Areas of investment for retailers investing in technology
7%
10%
15%
15%
16%
25%
32%
43%
51%
55%Webstie and or digital presence
IT software
IT hardware
Payment systems
Apps for smartphones or tablets
Internet of Things
IT infrastucture
Cloud technology
Service through chat apps
Video assistance Retail FY18
Impact of investment in technology
10%
11%
14%
20%
16%
20%
22%
25%
32%
33%
40%
41%Staff will be able to focus on delivering better customer care
Staff will be able to focus on generating revenue
Staff will be able to take on more management