It is vital to study statistics in the most efficient way.
Why? It is the subject that would also help to build up career. Statistics is one of the essential fields of the study and to become a professional it is really crucial to understand the essence of statistics in developing the accurate predictions.
The companies can surely depend on the analytics which is said to be highly effective and this would help to work on the right statistics.
What is meant by business statistics?
When it comes to statistical research in the business this gives the ability to managers to understand and analyse the past performance and then forecast the future of the business practices that would help the business run effectively. Statistics would ensure that you have a better understanding of the market and then plan advertisement. You can possibly set up prices and then respond to the changes based on the consumer demand.
- Descriptive analytics focuses on the occurrences and find out an explanation behind the situation. Making use of the historical data, the managers have the ability to analyse the success and failures. This is also known as the cause and effect analysis. There are some common applications where you can make use of the descriptive analytics which would include marketing, operations, finance and sales.
- Predictive analytics can make use of the different types of statistical techniques which would include data mining and modelling. This would also predict the probabilities and the trends that widely depend on the historical data. This will allow in reporting and would also help to create the best estimation for the things that would happen. Predictive analysis can be used in risk assessment, fraud detection, marketing and operation.
- Prescriptive analysis is the way through which you can understand the actual course of action that would be eligible for handling the business situation. This would include things like future occurrences and the reasons behind the happening and also to navigate it. It is necessary to constantly update the information that would change prescriptive analysis and would help the manager to enjoy the action plan for the organization.
Different types of application of statistical analysis
There are many businesses that would operate under different conditions of the probability and there would be uncertainty as the variables as well as the other external factors may influence the situation. The decision making process of any business would include the collection of data and proper analysis.
The information obtained through analysis will help to take optimal business decision. The computerized analysis would certainly make the task simple and easy. There are different examples through which you can make use of the statistical methods and that would help in decision making process:
- The production manager can make use of the random sampling technique and the quality control department can make use of it to understand the quality of the materials. Accountants make use of the technique while doing the auditing of accounts receivable for the customers.
- Through regression and correlation analysis it is possible to find out the relation between the set of the financial ratios along with business variables.
- Adopt the forecasting technique that is usually handled by the top management to assume the sales volume for next budget year.
- Marketing department will allow to test the significance of the market research along with the suitable target market to identify the new products and services.
- You can also make use of the standard deviation method which is usually adopted by different profit centres as it helps to cut down the risk of the particular things for better business decision.
Need to evaluate the alternative scenario
It is not only helpful in managing the performance of workers, but the manager can also take the initiative in taking proper decision along with other managers of the company. Statistics enable the managers to understand the situation and then compare the scenarios so that best option can be selected.
The team becomes highly concerned about deciding the software which will help in making customer ordering process. The managers are eligible for making use of the software product that would be successfully used by competitors and can make the choice. The team needs to collect the data from the software and also from the independent sources that will help to take better purchasing decisions.
Role of statistics in business decision making
You need to understand that to run a business is not an easy task and it includes different tasks. The business is said to be the complex machine. No matter whether you are running a small company or a large entity, it is essential that you learn each activity that would speak about the health of the venture.
Today, you would come across with new entrepreneurs who fail to keep an eye on the statistics. This is the biggest mistake that the entrepreneurs usually do. There is also the possibility that there are certain occurrences in the background which can threaten the business. There are tools that would help to monitor the situation and can lead you to trouble.
You should always monitor the statistics of your business and here are few of the advantages:
- Being highly proactive:
It is necessary to become highly proactive to the scenarios which is highly effective and needs to be highly reactive. In case there is a bad publicity of the product you can proactively understand the minimize damage to brand.
- Taking proper benefit of the situation:
The important statistics of the business is also referred as the key performance indicators which can help to generate revenue. Supposedly, a customer buying two products together will have a good experience than the customer buy a single product.
So, you need to encourage other customers as well to opt for the second product. This is said to be the best way through which you can generate revenue and gain positive experience.
- Diminish the costs:
Through the statistical data it is possible to learn about the processing of your back office which will help to identify the loopholes and make sure to improve the efficiency by implementing the right kind of strategy.
There are different ways through which you can save money:
- Decrease the stock that comes along with certain products
- Reducing time that usually takes to fulfil a particular order
- Decreasing the shipping costs while making the courier service highly efficient.
- Identify the efficient workers:
While running a business, it is essential that you identify the productive workers within the organization. This will enable to understand the employee on whom you can depend during the rush hours. It is obvious that your business completely depends on the performance of your employee and certainly you would not agree on poorly performing in the market. Appreciating the performance of employee is also possible through statistical data.
- Proper planning of resources:
A business can run successfully only if it has the ability to allocate the resources which would make things effective and would not cost much. So, if you are enthusiasts about running the business, then you need to do the same. It is vital to allocate the resources appropriately.
Application of statistics in different fields
Statistics is very much important and it is being adopted in different fields. The subject plays a major role in different sectors:
- Mathematics
Formulas in mathematics are reliable, but if you are concerned about getting more accurate and precise data, then you need to follow the statistical methods. This is also known as applied math. The technique is used in both field such as statistical method and mathematical concepts include probability, dispersion etc.
- Economics
There are many concepts that revolve round the economics and it depends on the statistics. The data collected is to identify the employment rate, inflation; national income etc. Everything is well interpreted through statistical data. Even the theory related to demand and supply are studied in the subject.
- Administration system of the country
There are many national policies which would be based on the statistical methods and the decision is taken based on the gathered data and information. Statistics would come up with the most accurate data which enable government to fix the budget and also understand the revenue and expenditure of the country.
- Business
Business students should understand the importance of the statistics. It is necessary for the entrepreneurs to take quick and immediate decisions while making use of the concept which would help in decision making process. The strategies would be implemented based on the statistical data so that it becomes easier to target the market,
- Accounting
Through accounting it is possible to identify the exact data which will contribute in profitability of the business. There are decisions that you can take based on the statistical data which is highly precise and accurate. Sampling can be used to understand the current trend of the market which will enable in taking better decision.
- Banking
Customers deposit money in the bank and there is less chance of withdrawing the money in the near future. So the bank lends the money to other customers with the expectation to earn interest through the loan amount. To manage the process, statistical approach is adopted for the service. This enables to avoid any kind of unforeseen circumstances.
Statistics is widely used by the managers of the company
The most important element that you need to consider while making use of statistics is the exactness of the data collection and the information that is chosen for the statistical design and the model to analyse the data. There are descriptive and the inferential methods which would play an important role in business management. There are certain functions such as:
- In case of the finance manager, there is a possibility of handling the financial data while adopting different financial techniques as this would play an important role in day-to-day life. Having proper knowledge on the statistics will enable to add to the competency of the manager and give a competitive edge.
- The productive manager will also to make use of the statistical process control technique that would enhance the quality and productivity. Having thorough knowledge on the sampling technique, control charts and the probability distribution will allow in having better processes.
- The marketing manager would gather and analyse the information that is obtained from the market. Marketing strategy can only depend on the proper market research work which would depend on the statistical methods.
Statistics is the subject that would completely deal with the data and will come up with the conclusion that is accurate and maintain preciseness. There are different statistical techniques available which will help to get the reliable solution. The managers have the ability to handle the uncertain situation with high level of confidence as the statistical data enables to get a complete view of the situation.
If you are an HR manager, you can still make use of the statistical tool to identify the best method to train employees and then evaluate the training. It is essential to understand the underlying factors.
Help to get an idea of the future
Proper analysis of the statistical tool will enable to manage the proper forecast or the picture of the market. It is said to be the most cost effective technique through which you can take future decision. The statistics would help to analyse the past trend and then allow in predicting the future.
The main objective of the statistical tool is to enable the managers to emphasize on the future and help in achieving short-term goal. The statistical analysis will allow in making assumptions and then make proper future planning which would help to gain higher profit.
There is no other tool available which will give such exact information. Through statistics you can possibly come to conclusion and target the population by choosing sample data. The analysis will come up with the results that are supported with proper evidence and facts.
The statistical tool appears to be highly effective as this allows in collecting of data and get information from the general public. Through statistics it is possible to get reliable and valid information based on the market. Wide range of data collected to understand the need of consumers.
Author Bio:
Susan Anderson is a professional online tutor who has 6 years of experience in the field of statistics. She is concerned about understanding the difficulties of the students and deliver solutions that enables proper understanding of the subject. Unique teaching style is adopted to make sure that students have good grasp on the subject.