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ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting

Orion Foods is considering using big data from social media to inform product strategy. The management accountant is asked to identify the most significant risk to the reliability of strategic decisions based on this data. Which risk is most relevant to decision quality?

The key risk to decision quality is that social media data may be unrepresentative or inaccurate, so apparent patterns can be misleading or spurious correlations. Management must validate the data and apply judgement, rather than assume sheer volume guarantees reliable insight.

  1. AData may be unrepresentative or of uncertain accuracy, so patterns found may be misleading or spuriousCorrect
  2. BThe data will always be too expensive to store under any technology
  3. CSocial media data cannot be analysed using statistical methods
  4. DBig data eliminates the need for management judgement, so decisions become unaccountable

Explanation

Large unstructured datasets often come from self-selected users and contain noise, so correlations may be spurious and unrepresentative of the customer base. Storage cost is not always prohibitive, statistical methods can be applied, and judgement is still required rather than eliminated.

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