Business statistics fundamentals and applications

Business Statistics

Statistical data is a vital aid for businesses to make decisions that involve uncertainty and risks in the future. The use of probability distribution offers general idea to the businesses how the future events are most likely to turn out. Because in normal circumstances, the likelihood of occurring random event is same, however, when the likelihood of occurring some occurrence becomes higher than expected, the business can take proactive actions and plan accordingly. For example, the Insurance companies believe that the chances of car crash for safe drivers are less than 1.5% over their life times, however, recently due to the bursting of tires of Ford SUV, the probability of the crash jumped exponentially. The Insurance companies were quick to notice this abnormality and find the cause of the problem.

Statistics are important to provide information on existing and potential markets, measure industry performance and indicate social and economic trends. There are several devices such as mean, standard deviation, proportion, variance etc. that can be used by businesses in making their everyday decisions.

In some cases simple counts of data may work. For example, with count data, one can be certain about the past occurrence of an event and those counts then can be put in different measurement units to create different charts and graphs that can provide a comparison over different dimensions.

In some of the circumstances, the probability model is likely to approximate the behavior of the counts when the process displays a reasonable degree of statistical control. Yet, deciding which probability model is appropriate requires judgment that most managers do not possess.

In the recent years, with great use of information technology, statistical methods have emerged in recent years as one of the fundamental tools for business decision support, which provides businesses important device in making complex decisions quickly.

Because the nature of economic and business phenomena is clearly statistical in nature and the need for a scientific approach is becoming more and more necessary, so statistical analysis has become an integral part of every aspect of theoretical and applied research.

The inter-dependence of economies and the development of global markets has introduced new levels and sources of competition for the businesses. Businesses face new levels of risk as the markets in which they operate become more open. Should they invest in new capacity to be able to compete more effectively? How exposed a position can they afford to take in their key markets? In short, how does a business cope with the risks inherent in the modern economy? When uncertainty is so high, the management has no choice but make the use of the statistics to justify their decisions. So statistical devices are a set of tools that can help business organizations impose order in the modern world. Business statistics offer the opportunity to make decisions based on numerical data, in the face of uncertainty.