Principles of Management and Information Systems

Q1 Describe the term ‘‘Portfolio Management’’. Briefly discuss the basic steps for the implementation of portfolio
management. Also list the advantages of portfolio management .
Portfolio Management is the process of creating and managing an appropriate portfolio of investments. It
involves selecting a suitable mix of investments in accordance with financial goals and risk tolerance of the
investor. The term portfolio management is also known as “Asset management’’ or “Wealth
management’’. Portfolio management aims at increasing return on investment and maximizing the wealth
of investors through deciding an optimal portfolio 1.

The basic steps for the implementation of portfolio management are as follows:
1. Understanding the needs of the client: The first step is to understand the client’s financial goals,
risk tolerance, and investment horizon. This helps in creating an investment policy statement (IPS)
that outlines the investment objectives and constraints.
2. Asset allocation: The next step is to allocate assets based on the IPS. This involves selecting the
right mix of asset classes such as stocks, bonds, and cash equivalents.
3. Security analysis: Once the asset classes are selected, the next step is to analyze individual
securities within each asset class. This involves evaluating the securities based on their risk and
return characteristics.
4. Portfolio construction: After the securities are analyzed, the next step is to construct a portfolio
that meets the investment objectives and constraints outlined in the IPS.
5. Portfolio monitoring and rebalancing: The final step is to monitor the portfolio regularly and
rebalance it as needed. This involves reviewing the portfolio’s performance, making necessary
adjustments, and ensuring that it remains aligned with the client’s investment objectives and
constraints.

2. Explain the Role of Business Intelligence in various applications.

Business Intelligence (BI) is a technology-driven process that helps organizations to analyze and
visualize data to make informed business decisions1. BI is used in various applications such as:
Decision Making: BI helps decision-makers of organizations to make informed decisions by
providing them with insights into the organization’s data2.

 Data Mining: BI is used in data mining to extract knowledge from large datasets2.
 Operational Analytics: BI is used in operational analytics to monitor and manage operational
processes2.
 Predictive Analytics: BI is used in predictive analytics to predict future trends and events2.
 Prescriptive Analytics: BI is used in prescriptive analytics to provide recommendations on how to
optimize business processes2.
 Structured Data: BI is used to convert unstructured data into structured data2.
 Decision Support System: BI is used in decision support systems to provide decision-makers with
the necessary information to make informed decisions2.BI is used in various industries such as
healthcare, finance, retail, and manufacturing3. For example, in healthcare, BI is used to analyze
patient data to improve patient outcomes3. In finance, BI is used to analyze financial data to
identify trends and patterns3. In retail, BI is used to analyze customer data to improve customer
experience3. In manufacturing, BI is used to monitor and manage production processes3.

In summary, BI is a powerful tool that helps organizations to make informed decisions by analyzing
and visualizing data. It is used in various applications and industries to improve business processes
and outcomes.