Final Year Project 9

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CHAPTER - 1

INTRODUCTION

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1.1 INTRODUCTION
Artificial intelligence (AI) is reshaping business, economy, and
society by transforming experiences and relationships amongst stakeholders and
citizens. The roots of AI may lie in ancient cultures of Greek (e.g., the
mythological robot Talos), Chinese (e.g., Yueying Huang’ dogs) and other
mythologies (Nahodil & Vitku, 2013), where automatons were believed to be
imbued with real minds, capable of wisdom and emotion. Yet, the term emerged
in a workshop at Dartmouth College (United States) in 1956 (Nilsson, 2010),
which is dubbed the birth of AI.
Since then, research on AI has stemmed from different fields of
knowledge. Social scientists have been discussing ethical and legal implications
of AI (Cath, 2018), computer scientists have developed advanced deep learning
algorithms (LeCun, Bengio, & Hinton, 2015), while researchers in business
management have studied the impacts of AI on customers, firms, and
stakeholders in an increasingly automated and interrelated business world
(Huang & Rust, 2018). However, such advances in AI research have mainly
been done in isolated silos with few interdisciplinary exchanges. Similarly, a
unique and consensual definition of AI has been hard to get.
Recently, Russell and Norvig (2016) summarize the various
definitions of AI systems into four categories along two dimensions: reasoning–
behaviour dimension and human performance–rationality dimension. These are:
(1) systems that think like humans, (2) systems that act like humans, (3) systems
that think rationally, and (4) systems that act rationally. AI systems should have
the following capabilities: natural language processing to communicate in a
natural language, knowledge representation to store information, automated
reasoning - the use of the stored information to answer questions and to draw
new conclusions, and machine learning to adapt to new circumstances and to
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detect and extrapolate patterns (e.g., Huang and Rust, 2018, Russell and Norvig,
2016). Yet, the lack of a consensual definition has not prevented the spread of
research for new applications of AI in the world.

1.2 STATEMENT OF PROBLEM


The rapid advancement of Artificial Intelligence (AI) presents both
opportunities and challenges for businesses across various industries. While AI
technologies have the potential to enhance productivity, streamline operations,
and enable data-driven decision-making, many organizations face difficulties in
understanding, adopting, and integrating AI effectively. The main problems
include a lack of awareness about AI's capabilities, fear of job displacement,
ethical concerns, and significant financial and technical barriers to
implementation. Businesses also struggle with leveraging AI to deliver tangible
outcomes such as improved customer experiences, cost reductions, and
competitive advantages.
This project is to explore the profound impact of AI on business
operations, focusing on how AI-driven tools and technologies are reshaping
areas such as marketing, customer service, supply chain management, and
product development. By leveraging AI, businesses can streamline processes,
reduce operational costs, and provide more personalized services to customers.

1.3 SCOPE OF STUDY


The main aim of this study is to highlight the challenges associated
with implementing AI, such as ethical concerns, data privacy, and the need for a
skilled workforce, while discussing future trends that will shape the next phase
of AI in business.

1.4 SIGNIFICANCE OF STUDY


To promote the growing need to address these concerns like data
privacy, cost of implementation, over reliance in AI, fear of job displacement by
identifying how AI can be applied efficiently in business processes, ensuring its

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responsible use, and bridging the gap between technological innovation and
organizational strategy.

1.7 CHAPTERIZATION
Chapter 1 : Introduction
Chapter 2 : Review of literature
Chapter 3 : Theoretical Framework
Chapter 4 : Data analysis and Interpretation
Chapter 5 : Conclusion

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CHAPTER – 2
REVIEW OF
LITERATURE

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2.1 EMPRICAL REVIEW

DR.V.R.palanivelu and B.Vasanthi(2020) in her paper titled “Role of


Artificial Intelligence in business transformation” explored how AI is
transforming businesses by integrating into various functions, improving
efficiency, driving innovation and enhancing decision making. The findings
reveal that AI is a key driver of business transformation, automating tasks,
enabling data driven strategy and enhancing customer interactions.

Sandra Maria Correia Loureire et.al(2021) the author aims to explore the
current applications of AI in business. The author observed that AI is being
applied in areas like marketing, customer service, supply chain management
with technologies such as machine learning, natural language processing and
robotics driving innovation.

Wiebke Reim et.al (2020) the author aims to explore roadmap for AI
integration and a structured approach for businesses to integrate AI in to their
operations ensuring that companies can strategically adopt AI to gain a
competitive advantage. The author found out that to propose a step by step
framework or roadmap that businesses can follow to successfully integrate AI
into their processes. This roadmap likely includes phases like identifying
business needs, building infrastructure and ensuring staff and skilled in AI tech

Daniel Bendek et.al(2 ) The author aims to explore insights and


recommendations for businesses on how to responsibly integrate AI
technologies while addressing ethical concerns and maximizing positive
impacts. The author suggests that business should adopt a strategic approach on
AI implementation, focusing on ethical considerations, stakeholder engagement,
and continuous monitoring of AI systems to mitigate risks and maximize
benefits.

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David Oyekunle and David Boohene( 2020) The authors aim to explore how
AI adoption impacts organizational strategies, culture, resource allocation, and
operational optimization. The research also examines challenges related to AI
deployment, such as data security and workforce readiness, providing insights
for businesses transitioning into AI-driven models. The authors found that the
successful adoption of AI requires balancing technological advancements with
workforce readiness, organizational culture, and ethical considerations. The
study also emphasizes the importance of addressing challenges like data
security and ensuring employees are equipped with the necessary skills for AI-
driven environments.

Jasmin Praful Bharadiya et.al( 2018) In the paper titled "Rise of Artificial
Intelligence in Business and Industry" focus on analyzing the integration of AI
technologies across various sectors, identifying the benefits and challenges
associated with their adoption, and evaluating future trends in AI's role within
business practices. The findings of the study highlight that AI technologies are
transforming business operations by improving efficiency and decision-making
processes. Key insights include the ability of AI to enhance customer
experiences through personalized services and automation.

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CHAPTER 3
THEORETICAL
FRAMEWORK

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3.1 MEANING AND DEFINITION OF AI
Artificial Intelligence (AI) refers to the simulation of human
intelligence processes by machines, particularly computer systems. These
processes include learning (the acquisition of information and rules for using it),
reasoning (the ability to solve problems logically), and self-correction. AI
systems can perform tasks that typically require human intelligence, such as
understanding natural language, recognizing patterns, and making decisions. AI
can be categorized into two main types: narrow AI, which is designed for
specific tasks (like virtual assistants), and general AI, which possesses the
ability to perform any intellectual task that a human can do.
The definition of Artificial Intelligence (AI) has evolved over time
and has been shaped by various researchers and institutions.
1. John McCarthy: Often referred to as the "father of AI," McCarthy
coined the term "Artificial Intelligence" in 1955. He defined it as "the science
and engineering of making intelligent machines, especially intelligent computer
programs."
2. Alan Turing: Turing's work in the 1950s laid the foundation for AI.
He proposed the Turing Test as a measure of a machine's ability to exhibit
intelligent behaviour indistinguishable from that of a human.
3. Marvin Minsky: Another pioneer in the field, Minsky co-founded
the MIT AI Lab and contributed to the early definitions and understanding of AI
.
AI definitions continue to be refined by researchers and practitioners
across various disciplines, reflecting advancements in technology and
understanding of intelligence itself.

3.2 HISTORY OF AI
The history of artificial intelligence (AI) spans several decades, rooted in a
combination of philosophy, mathematics, computer science, cognitive science,
and neuroscience. Here’s an overview of its major milestones:
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1. Early Concepts (Pre-20th Century)
Philosophy of Intelligence: Ideas about artificial beings capable of thinking date
back to ancient times. Philosophers like Aristotle pondered the nature of
thought and logic, laying a foundation for later AI research.
Mechanical Automata: In the 17th and 18th centuries, engineers like Jacques de
Vaucanson and others built mechanical devices that could simulate simple
human or animal actions, setting the stage for future interest in automating
intelligence.

2. Early 20th Century Foundations


Alan Turing (1936): British mathematician Alan Turing developed the
concept of the Turing Machine, a theoretical model of computation that
became fundamental to computer science. He later introduced the idea of the
Turing Test in 1950 to determine if a machine could exhibit intelligent
behavior indistinguishable from a human.
Norbert Wiener and Cybernetics (1948): Wiener coined the term cybernetics,
describing systems that use feedback loops for control and communication. His
ideas influenced early AI thinking about machines capable of learning and
adaptation.

3. 1950s–1960s: The Birth of AI


Dartmouth Conference (1956): AI as a formal field of study began at this
conference, organized by John McCarthy, Marvin Minsky, Nathaniel
Rochester, and Claude Shannon. They coined the term artificial intelligence
and discussed the possibility of machines simulating aspects of human
intelligence.
Early Programs: In the late 1950s, the first AI programs were developed:
Logic Theorist (1955): Developed by Allen Newell and Herbert A. Simon, it
could prove mathematical theorems.
General Problem Solver (1957): Another program by Newell and Simon,
capable of solving broad classes of problems.

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LISP (1958): Created by John McCarthy, this programming language became
crucial for AI development due to its flexibility in symbolic computation.

4. 1970s: Early Challenges and the AI Winter


Expert Systems: The 1970s saw the rise of expert systems like MYCIN, a
program that could diagnose blood infections. These systems aimed to
replicate the decision-making abilities of human experts.
AI Winter: Despite early optimism, AI research hit major obstacles, such as
limited computational power and the difficulty of translating human
reasoning into algorithms. This led to reduced funding and interest, a
period referred to as the AI Winter (late 1970s to 1990s).

5. 1980s–1990s: Revival and Machine Learning


Expert Systems Boom: In the 1980s, expert systems became commercially
viable, and AI research was revived. Companies used these systems in fields
like medical diagnosis, finance, and manufacturing.

Neural Networks: The 1980s also saw the resurgence of neural networks,
thanks to the development of backpropagation algorithms by researchers like
Geoffrey Hinton and David Rumelhart. These algorithms allowed neural
networks to "learn" by adjusting weights based on errors in predictions.
Deep Blue (1997): IBM’s Deep Blue became the first computer to defeat a
reigning world chess champion, Garry Kasparov, marking a major
achievement in AI.

Key Areas of AI Today:

Natural Language Processing (NLP): Includes technologies like chatbots,


virtual assistants (e.g., Siri, Alexa), and translation services.
Computer Vision: AI systems capable of interpreting visual data, used in facial
recognition, autonomous driving, and medical imaging.

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Robotics: AI-powered robots that can assist in manufacturing, surgery, and
exploration.
Reinforcement Learning: Algorithms that learn to make decisions by interacting
with their environment, critical for game AI, robotics, and autonomous systems.
The future of AI is poised to explore more complex forms of intelligence,
possibly leading to breakthroughs in general AI, which can perform any
intellectual task that a human can, beyond today's narrow applications.

3.3 APPLICATION OF AI IN BUSINESS


AI is transforming the business landscape in a variety of industries. Here are
some key applications of AI in business:
1. Customer Service and Support:
Chatbots and Virtual Assistants: AI-driven chatbots provide 24/7 customer
service, answer common queries, and improve response times.
Sentiment Analysis: AI can analyze customer reviews and feedback to understand
emotions and identify areas for improvement.
2. Marketing and Sales:
Personalization: AI algorithms analyze customer data to offer personalized
recommendations and targeted marketing campaigns.
Predictive Analytics: AI helps forecast customer behavior, sales trends, and
market changes, leading to more effective decision-making.
3. Supply Chain Management:
Demand Forecasting: AI can predict demand fluctuations, helping businesses
manage inventory levels more efficiently.
Logistics Optimization: AI-powered systems optimize delivery routes, reducing
costs and improving delivery times.
4. Human Resources (HR):
Recruitment and Screening: AI helps automate the recruitment process by
scanning resumes, identifying the best candidates, and streamlining hiring.
Employee Retention: AI can analyze employee data to identify patterns that might
signal dissatisfaction or a risk of attrition.

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5. Financial Services:
Fraud Detection: AI systems detect unusual transaction patterns and potential
fraudulent activity in real time.
Credit Scoring: AI helps assess credit risk by analyzing a wide range of data
points beyond traditional metrics.

3.4 RISK INVOLVED IN ROLE OF AI IN


BUSINESS
Here are the risks involved in the role of AI in business, without the mitigations:
1. Data Privacy and Security
AI systems rely on vast amounts of data, including sensitive personal and
corporate information. Improper handling of data can lead to breaches or
violations of privacy regulations like GDPR or CCPA.

2. Bias and Discrimination


AI algorithms can perpetuate or even exacerbate biases present in the training
data. This could lead to unfair decisions in hiring, lending, or customer service.

3. Job Displacement
Automation through AI can lead to job loss or displacement, especially in
routine or repetitive roles.

4. Over-Reliance on AI
Relying too heavily on AI systems may reduce human oversight, leading to
decisions based on algorithms that may be incorrect, unethical, or inappropriate.

5. Regulatory and Ethical Concerns

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AI technologies may operate in areas where regulation is still developing,
leading to legal risks. Ethical dilemmas may arise regarding transparency,
accountability, and the impact of AI decisions.

6. Cost and Integration Challenges


AI implementation can be expensive, especially for small and medium-sized
businesses. Integration into existing systems can also pose technical challenges.

3.5 MEASURES TAKEN TO ADDRESS THE


RISKS INVOLVED
Here are specific measures businesses can take to address the risks involved in
AI:

1. Data Privacy and Security


• Encrypt sensitive data and ensure it is anonymized when possible.
• Implement multi-factor authentication (MFA) and regular cybersecurity
audits.
• Follow privacy regulations (e.g., GDPR, CCPA) with data handling
policies.
• Conduct penetration testing to assess vulnerabilities in data storage and
transmission.

2. Bias and Discrimination


• Use bias detection tools to analyze datasets and algorithms for
discriminatory patterns.
• Regularly audit AI models for fairness across different demographic
groups.
• Train AI systems on diverse and representative datasets to minimize bias.
• Establish internal AI ethics committees to monitor for bias and unfair
practices.

3. Job Displacement

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• Develop reskilling programs to help employees transition into roles that
require human creativity and judgment.
• Foster a culture of continuous learning, particularly in AI-related
technologies.
• Implement phased automation, where AI assists rather than fully replaces
human workers.

4. Over-Reliance on AI
• Design processes where humans remain in control of critical decisions,
with AI providing support.
• Encourage a collaborative AI-human decision-making approach,
especially for complex or high-stakes tasks.
• Introduce human review checkpoints in AI-powered workflows to ensure
accountability.
5. Regulatory and Ethical Concerns
• Set up compliance teams to monitor AI-related regulations and adjust
practices accordingly.
• Ensure transparency in AI decision-making with explainable AI models.
• Develop ethical guidelines for AI usage, focusing on transparency,
fairness, and accountability.
• Engage in public discussions and policy dialogues on AI regulation to
stay ahead of legal developments.

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CHAPTER – 4
ANALYSIS AND
INTERPRETATION

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4.1: AGE OF RESPONDENTS

TABLE 4.1: SHOWING AGE OF RESPONDENTS

AGE FREQUENCY PERCENTAGE


15 – 20 41 82%
20 - 25 9 18%
25 - 30 0 0
TOTAL 50 100%

82% belong to the age category 15 – 20 and the remaining 18% belong to the
age group of 20 – 25

CHART 4.1: SHOWING AGE OF RESPONDENTS

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4.2: GENDER OF RESPONDENTS

TABLE 4.2: SHOWING GENDER OF RESPONDENTS

GENDER FREQUENCY PERCENTAGE


MALE 29 58%
FEMALE 21 42%
PREFER NOT TO SAY 0 0
TOTAL 50 100%

58% of respondents are male whereas the remaining 42% of respondents are
female

CHART 4.2: SHOWING GENDER OF RESPONDENTS

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4.3: PROFESSION OF RESPONDENTS

TABLE 4.3: SHOWING PROFESSION OF RESPONDENTS

PROFESSION FREQUENCY PERCENTAGE


STUDENTS 32 64%
WORKING 18 36%
TOTAL 50 100%

64% of respondents belongs to category students whereas the remaining 36% of


respondents are working

CHART 4.3: SHOWING PROFESSION OF RESPONDENTS

PROFESSION

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32

STUDENTS WORKING

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4.4: CURRENT UNDERSTANDING OF AI

TABLE 4.4: SHOWING CURRENT UNDERSTANDING OF AI

UNDERSTANDING FREQUENCY PERCENTAGE


BASIC 23 49%
INTERMEDIATE 20 40%
ADVANCED 4 8%
NO 3 6%
UNDERSTANDING
TOTAL 50 100%

49% of respondents have basic understanding of AI, 40% of respondents have


medium level of understanding about AI,8% of respondents have advanced
level of understanding whereas remaining 6% do not have any knowledge about
AI.

CHART 4.4: SHOWING CURRENT UNDERSTANDING OF AI

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CHAPTER 5
FINDINGS, SUGGESTION
AND CONCLUSION

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FINDINGS
➢ 82% of respondents belong to the age category 15 – 20 and the remaining
18% belong to the age group of 20 – 25

➢ 58% of respondents are male whereas the remaining 42% of respondents


are female

➢ Current Understanding of AI: A significant portion (49%) of respondents


have a basic understanding of AI, while 40% have an intermediate level,
and only 8% possess advanced knowledge. This highlights a knowledge
gap that could affect AI adoption.

➢ AI Applications Familiarity: While 62% of respondents are somewhat


familiar with AI applications in business, 10% are not familiar at all,
indicating a need for more awareness and education in AI applications.

➢ AI and Job Displacement: 50% of respondents believe AI may cause job


displacement in the business sector, while 36% think it will lead to job
losses. This reflects growing concerns about AI’s impact on employment.

➢ Business Automation: 57% of respondents believe that businesses will


become fully automated in the future with AI, showcasing optimism
about AI's long-term capabilities in process automation.

SUGGESTIONS:
➢ Increase AI Awareness and Training
Educational Programs: Given that 49% of respondents have only a basic
understanding of AI, businesses should invest in educational programs

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and training to elevate AI literacy. Offering workshops, online courses,
and AI certifications can help bridge this knowledge gap.

➢ Address Ethical Concerns and Data Privacy


Transparent AI Practices: Given the security and ethical concerns raised
by 39% and 24% of respondents, companies should prioritize
transparency in how AI processes data and makes decisions. Establishing
clear ethical guidelines and ensuring that AI models are explainable will
build trust among users and customers.

➢ Cost-Effective AI Implementation Strategies


Modular AI Adoption: To address the concern around the high costs of AI
(identified by 33% of respondents), businesses should consider phased,
modular AI implementation. Start with smaller AI tools like chatbots or
predictive analytics and scale based on measurable ROI.

➢ Mitigating Job Displacement Concerns


Human-AI Collaboration: Highlight that AI is a tool designed to augment
human abilities, not fully replace them. Businesses should implement AI
in ways that support human decision-making and creativity, which can
reduce fears of job loss. Encourage hybrid models where humans and AI
collaborate for better outcomes.

➢ Focus on Business Sectors Poised for AI Growth


Sector-Specific AI Adoption: Given that marketing (40%) and customer
service (0%) are seen as key areas benefiting from AI, businesses in these
sectors should prioritize AI-driven personalization and automation tools

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CONCLUSION:
In conclusion, this project shows that while people see how new technologies
can make businesses run better and more efficiently, they also worry about
things like costs, job losses, and privacy. To make the most of these
technologies, businesses should focus on educating their workers, using
technology responsibly and addressing these concerns.

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BIBLIOGRAPHY

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BOOKS
1. "Artificial Intelligence for Business: A Roadmap for Getting Started with AI"
by Steven.
2. "The AI Advantage: How to Put the Artificial Intelligence Revolution to
Work" by Thomas H. Davenport and Rajeev Ronanki
3. "Competing in the Age of AI: How to Put Artificial Intelligence at the Center
of Your Business" by Marco Iansiti and Karim R. Lakhani
4. "AI for Marketing and Product Innovation: How to Use Artificial Intelligence
to Grow Your Business" by A. K. Pradeep, Andrew P. P. D. Smith, and Stan
Sthanunathan

REFERENCES
1.Artificial intelligence in business – journal of business research, 2021 – J
Guerreiro, Tussyadiah
2.Role of Artificial Intelligence in business transformation – international
journal of advanced science and technology,2020 – B.Vasanthi
3. Artificial intelligence adoption in the post COVID-19 new-normal and role of
smart technologies in transforming business: a review Pragati Agarwal, Sanjeev
Swami, Sunita Kumari Malhotra
4. Rise of Artificial Intelligence in Business and Industry - June 2023Journal of
Engineering Research and Reports

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5. Digital transformation potential: the role of artificial intelligence in business -
David Oyekunle
6.Implementation of AI : a roadmap for business model innovation,2020
7.AI business model : an integrative business approach,2021 – journal of
innovation and entrepreneurship
8.Journal of digital transformation potential : the role of AI in business,2024 –
David Oyekunle
9.Assessing AI role in business, its impacts, limitations and ethical
concerns,2024 – Daniel Bendek
10.Examining the present and future integrated role of AI in business : a survey
study on corporate sector,2021 – Kamlesh Narwani

WEBSITES
1.scholar.google.co.in
2.https://openaccessojs.com
3.https://www.researchgate.net
4.https://www.oxjournal.org

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ANNEXURE

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ANNEXURE
QUESTIONNAIRE
1.Name:
2.Age:
3.Gender:
4.Profession:
5. What is your current understanding of AI?
o Basic
o Intermediate
o Advanced
o No Understanding
6. How familiar are you with AI applications in Business?
o Very Familiar
o Somewhat Familiar
o Not Familiar
7. In your opinion, which business sector has benefited the most from AI
implementation?
o Customer Service
o Marketing
o Information Technology
o Manufacturing
8. What do you consider the primary benefit of AI in business?
o Cost Reduction
o Better customer insights
o Improved decision making
o Increased efficiency
9. What do you see as the most significant challenge in implementing AI in
business?
o High costs
o Job displacement
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o Data Security
o Ethical concerns
10. Do you believe that AI will lead to job displacement in business sectors?
o Yes
o No
o Maybe

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