Promotional Offer

Question 1

The credit card company, VISCARD, with 2 million customers, has designed a promotional offer and wants to communicate this to customers via direct mail so that they can enroll into the program. It costs $1 to mail a flyer, and there is only $30,000 budgeted to reach out to customers. You are assigned the task of identifying a cohort of 30,000 customers that are most likely to respond to the marketing promotion. You are given historic enrollment data with 100 variables. This is a classic binary classification problem: A customer enrolls or ignores the offer and does not enroll. After a few weeks, you have built a complicated model that turns out to be very accurate but does not give you any insight into which variables are associated with high enrollment probability. Should this model be used for this purpose? Are there any benefits in understanding how the model works, or is it just important to know that it works? Explain and justify your answer.

Question 2

While logistic regression and classification and regression trees (CART) have the same end goal, each model approaches the goal in a different way. Discuss the differences in the two models. Provide a specific example of a situation where employing a CART model would be preferable to a logistic regression model. Explain what makes the CART model superior in your example.

Question 3

“International Opportunities” Please respond to the following:

1. Given the advantages of international diversification, determine why some firms choose to not expand internationally. Provide specific examples to support your response. Use current readings and lecture material to support your response.
2. As firms attempt to internationalize, they may be tempted to locate their facilities where business regulation laws are relaxed. Discuss the advantages and potential risks of such an approach, providing specific examples. Use current readings and lecture material to support your response