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Business Administration QUESTION #9610
Question 1
A company collects customer data through its loyalty programme and uses predictive analytics to identify customers likely to churn within 90 days. It then offers targeted retention incentives only to those customers. This strategy combines which two management disciplines, and what ethical boundary must the company navigate?
  • Operations management and financial management — the ethical boundary is fair pricing across customer segments
  • Marketing management (CRM and retention strategy) and Management Information Systems (predictive analytics on customer data) — the ethical boundary is data privacy and informed consent; customers must have agreed to this use of their personal data under applicable data protection regulations, otherwise the predictive targeting violates privacy rights✔️
  • Strategic management and human resource management — the ethical boundary is employee data security during the analytics process
  • Supply chain management and marketing — the ethical boundary is that predictive models may discriminate against certain demographic groups in the incentive allocation
Correct Answer Explanation
Predictive churn modelling integrates MIS (data infrastructure, machine learning algorithms applied to loyalty data) with CRM/marketing strategy (targeted retention interventions). The critical ethical dimension is data privacy: the General Data Protection Regulation (GDPR) and Pakistan's Personal Data Protection Bill require that customers provide informed consent for their data to be used for profiling and automated decision-making. Using loyalty data for predictive targeting without explicit consent is a regulatory violation regardless of its commercial effectiveness.