Regression Analysis in Strategic Decision Making

Regression analysis is a powerful statistical approach that helps to predict the magnitude of one variable from the magnitude of other variables. Further, it provides a measure of how one variable is related to different variables. Thus, regression equations are plotted to estimate the value and direction of the dependent variable from the direction and values of the independent variable. The dependent variable is also called the criterion, while the independent variables are referred to as predictor variables. This is because the change in magnitude and direction of the independent variables will affect the dependent variable too. Hence, in brief the value of the dependent variable will be subjected to change if the magnitude and direction of independent variables changes. However, such cause and effect relationship may only be acknowledged if the dependent and independent variables are significantly correlated o each other (Freedman, 2005).
From the aspect of management decisions and managerial role profiles, regression equation may serve as a robust measurement of performance analysis. Each and every industry thrives to produce optimum performance and profitability. Hence, the employees of any organization are the backbone of any organization. The expertise, skills, knowledge and motivation are all key deciding factors in driving the productivity of an organization. From time to time, various managerial decisions need to be taken, to increase performance or downsize the wo…