Statistics are gathering, presenting, analysing, and interpreting numerical data. Statistics is a collection of decision-making strategies that help business people make appropriate policies. Every business person needs solid math and statistics skills. Statistics and mathematics manipulate, synthesize, and examine data for decision-making.
Statistics Meaning
The word statistics comes from Latin'status,' Italian'statista,' or German'statistik.' These terms signify 'Political state' in ancient times; governments were compelled to gather statistics on young males for Army recruitment. To estimate land income. Statistics is also dubbed "Political Arithmetic."
Business decision-making with statistics
Business stats
Business uses of statistics include:
- Statistical approaches provide quantitative data on production, selling, procurement, financing, etc. This helps businesspeople formulate policies.
- Using statistically-based time series analysis, the businessman may accurately forecast the influence of several variables.
- In corporate decision theory uses statistics to help make decisions without ambiguity.
- Statistical analysis and control are used extensively in modern business.
- Using Bayesian Decision Theory, businesspeople may select optimal decisions to examine each possible course of action directly.
A Control Chart based on Normal distribution can be used to determine the number of flaws in a paper roll, bale of fabric, or sheet of photographic film. Statistical quality control analyses Normal curve-based data.
- Economics statistics
Economics uses statistics. Income and spending statistics can impact customer happiness. Price and quantity data affect demand laws. A commodity's price is well-determined by buyer, seller, etc., data.
- Statistics' roles
Statistics is the study of gathering, organizing, presenting, analysing, and interpreting data that may assess conclusions in terms of probability.
Condensation
Statistics can condense enormous amounts of data into relevant information, such as sales forecasts, BSE indexes, GDP growth rate, etc. Income and spending statistics can't tell you anything about a company's profitability. Financial statistics like ROI, EPS, profit margins, etc., may be readily recalled and employed in rapid decision-making.
Comparison
Statistics enable comparisons. As of January 22, 2021, ITC's price-to-earnings ratio is 19.54 compared to HUL's. HUL's price-to-earnings ratio is 71.
Forecast
Statistics predict by analysing variable trends. Planning and decision-making require it. Business predictions based on intuition might be devastating.
- Hypothesis-testing
Hypotheses are claims based on literature regarding population parameters that a researcher wants to test. Drawing population conclusions from sample estimates is risky.
- Preciseness
Statistics quantitatively display facts. Quantitative data is more persuasive than qualitative. "Profit margin increases less in 2020 than 2019" is not precise and complete.
Statistics more accurately summarise information. The profit margin in 2020 is 5% of revenue, compared to 7% in 2019.
- Expectation
Statistics help frame clear strategies and policies. How much raw material to import in a year, how much capacity to grow, or people to hire, etc., relies on the predicted value of our actions.
- Statistics' importance
Statistics are a crucial aspect of many corporate operations, as seen below.
Statistics' relevance in several areas:
- Business and industry statistics
Previously, commercial choices were based on human judgment. Today, they use mathematical and statistical tools to make the optimal option.
We may reject or accept the population- or universe-based null hypothesis using the testing hypothesis.
By employing 'Bayesian Decision Theory' or 'Decision Theory,' we may pick the ideal decisions to evaluate each possible course of action directly.
Mathematics and statistics are used in decision-making, as seen below.
We select alternative courses of action, remove uncertainty, and calculate EOL, COL, etc.
- Science and research
Physical and natural sciences value statistics. It verifies scientific rules and phenomena.
- Banking Importance
Bankers must compare demand deposits, time deposits, credit, etc. Bankers develop loan policies based on demand and time deposits. Probability theory guides credit policy.
- State's Need
Ancient monarchs used statistics to gauge their military and economic power. Its reach grew to include other State political issues.
In the contemporary period, the function of the State has grown, and various governments care for their people. These governments need more numerical information to achieve welfare goals and function efficiently.
- Planning's importance
Planned growth maximizes a nation's resources for rapid growth. It takes lots of economic statistics.
Planning might strive for a specific economic growth rate. Using statistical approaches, you may examine the quantity of various economic resources and decide if the desired growth rate is sustainable.
Statistics' scope
Statistics cover these areas:
- Numbers facts
Statistics initially present an issue numerically. Numerical portrayal helps us comprehend the problem's nature.
- Simplifies complicated facts
An issue to be studied is usually represented as an enormous mass of difficult-to-understand numbers. Statistical tools can simplify this enormous amount of data.
Relationships between phenomena
Statistics may be used to compare phenomena—Income-consumption, demand-supply, etc.
- Aids policymaking
Economic, commercial, and government policy design begins with statistical analysis.
Using statistical approaches, companies may learn consumers' interests and preferences and produce products appropriately.
- Predicts
Government and commercial planning rely heavily on accurate projections. Statistics help make such projections.
- Tests hypotheses
A hypothesis describes population traits (or universe).
Techniques for uncertain decision-making
In unclear situations, may choose any of the numerous options. Uncertain investing prospects might cause a business person to lose or gain.
He may want to know whether to invest. Statistics-based decision-making under uncertainty solves such difficulties.
Statistics' limitations
Statistics is a science and an art utilized as a research tool in practically every field.
Statistics have several limitations.
- Statistics suits the study of quantitative data
Statistics is the study of quantitative data. Statistics may be used to study output, revenue, price, pay, height, weight, etc. Quantitative features.
Honesty, goodwill, duty, character, attractiveness, intellect, efficiency, integrity, etc., cannot be quantitatively measured and cannot be directly addressed using statistical approaches—qualitative qualities.
Such traits allow comparison. Statistical approaches are confined to quantitative and numeric qualitative qualities.
- Statistics aren't accurate
Specific criteria govern statistical analysis. Statistical investigations shouldn't always include the entire population.
Statistics require samples. Sample results may not apply to the whole population. Statistics may not be 100% accurate. Average statistics hold.
- Statistics only cover aggregates
Statistics don't separate things. Mr. X in college weighs 70 kg. This isn't statistical information. Statistics won't examine this claim. Statistical approaches can be used to analyse data if all students' weights are known.
Only experts need statistics.
Statistics combines art and science. Systematic and used in economics, business, astronomy, physics, medicine, etc. Statistics are complex. Everyone doesn't need the intelligence to understand and use these strategies. This requires a statistician.
Statistics aren't problem-solvers.
Statistical approaches investigate the problem essence. It's useless for problem-solving. Statistics may show that the average outcome of a particular college class has been declining for ten years, but they cannot suggest a remedy.
It can't help but take remedial steps to enhance that class's grade. Stats are a tool, not a goal. Statistics are used to study data.
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