Statistical analysis enables an enterprise to measure the performances of a business and identify trends. They collect the data and process their customer’s data with the help of statistics. Related. Note that only persons having a fundamental knowledge of statistical methodology can handle the data properly. Business managers use statistics as an aid to making decisions in the face of uncertainty. Results following these limitations are not accurate but approximate. Better planning and predictions are made through statistical analysis of data and figures. An important role of statistics in business is that it is expressed as a percentage ratio, average, a medium, and even a raw number. Your email address will not be published. Rational Decision Making. SCOPE AND IMPORTANCE OF STATISTICS IN BUSINESS Statistics is an. The importance of accuracy, and the dangers of profit targets, are graphically illustrated by events at Cisco. Many business enterprises are on the verge of collapse due to the absence of statistical analysis in measuring business performances. It may interest you to knot that no subjects, other than statistics, demonstrate and explain, so clearly, that there are several kinds of intelligence. Importance of Business Statistics . Also, statistical laws are not perfectly accurate. Designed by Pereere Codes | Copywright @ Machinep 2018-2020. The use of tools like Microsoft Excel to store, organise, and present data is a typical example of the use of statistics in business. A business enterprise that is void of statistical analysis in its mode of operation is like a blind man leading a group of fellow blind men. What is vital is that the method used to calculate the statistics is uniform in each time. 1.6 Importance of Statistics in Business 1.7 Limitations of statistics 1.8 Summary 1.9 Self-Test Questions 1.10 Suggested Readings 1.1 INTRODUCTION For a layman, ‘Statistics’ means numerical information expressed in quantitative terms. Importance of Studying Business Statistics. First, statisticians are guides for learning from data and navigating common problems that can lead you to incorrect conclusions. Almost every business uses business statistics to perform its day to day operations. He knows what his customers want; he should therefore know what to produce and sell and in what quantities. The measurement of profitability is as the essential as the earning of profit itself for a business firm. Statistics can be used for marketing and market analysis. Statistics in business can be likened to the third eye through which any business enterprise can see the future. Statistics works hand-in-hand with Mathematics. This is to say that since statistics deals with such characteristics that are affected by a multiplicity of causes, so it is not possible to study the effect of these factors. Furthermore, statistics focuses on aggregates and not with individuals. Various accounting techniques can be used for the purpose of financial analysis. Statistics can be used for making sales projections, financial analysis of capital expenditure projects, constructing profit projections for a new product, setting up production quantities, and making a sampling analysis to determine the quality of a product. Your email address will not be published. It is also the navigation compass that guides a company on the road path to take, in other to avoid shipwreck. “We use statistics to measure the unique users who interact with our video streaming platform. Role Of Statistics In Business Organization. This enables the enterprise to make a sound or rational decision, knowing that their judgment is based on data and facts and not on mere assumptions. Just relax and keep scrolling. A successful businessman must be very quick and accurate in decision making. In a last-ditch effort (which proved futile as well as dotty) to achieve predicted second quarter profits, warehouse people at San Jose were ordered to pile boxed-up machines onto trucks before the final midnight. In this post, I cover two main reasons why studying the field of statistics is crucial in modern society. This wonderful article explains, in detail, the relevance, role, and importance of statistics in Business. What is vital is that the method used to calculate the statistics is uniform in each time. For Fehzan Ali, CEO and co-founder of the Austin digital marketing company Adscend Media, the role of statistics in business decision making is equally important. Business statistics is the science of good decision making in the face of uncertainty and is used commonly in many disciplines which involve Economics, auditing, etc. Save my name, email, and website in this browser for the next time I comment. Importance Of Financial Performance Analysis 992 Words | 4 Pages. However, by using historical data, managers can analyze past successes and failures. This is known as “cause and effect analysis“. Statistics is used every now and then even outside the field of core Education such as Diagnosis and Programming. Statistics could be as a science of Average, a numerical statement of facts in any department of inquiry placed in relation to each other. Statistics are crucial for the business to make future decisions. Statistical analysis enables an enterprise to measure the performances of a business and identify trends. Business statistics play a vital role in areas such as tax preparation, budgeting, proposals, and data mining. Business companies use statistics in market research, evaluation, and product development. Hence, statistics, if clearly understood, is a fascinating subject that has tremendous importance in computer, philosophy, medical sciences, psychology, and most especially, in business. This information may relate to objects, subjects, activities, phenomena, or regions of space. Statistics is used every now and then even outside the field of … Business Statistics helps a business to: Deal with uncertainties by forecasting seasonal, cyclic and general economic fluctuations Helps in Sound Decision making by providing accurate estimates about costs, demand, prices, sales etc. Some questions are vital in market research that is if there is enough demand to justify spending money to develop a product? By. It can also be established that statistics can be misused by data placed on an inexperienced person which may lead to wrong results. Among the improvements are increased profitability, reduced cost, faster decision making, and critical performance improvements. Show More. Growing a business without the use of statistics is virtually impossible. Managers would want to monitor the demands of a product. In fact, SMEs in the UK have collectively seen their profits drop within each size bracket. Hence, statistics, if clearly understood, is a fascinating subject that has tremendous importance in computer, philosophy, medical sciences, psychology, and most especially, in business. But here in this blog, we are talking about the importance of statistics. Running away from Statistics is like running away from mathematics, you will be tired. These and more are the relevance of business statistics. The importance of business analytics (BA) was revealed in a recent Bloomberg survey, which found that BA has been effective in decision making for three out of four enterprises. An important role of statistics in business is that it is expressed as a percentage ratio, average, a medium, and even a raw number. by Pereere Smart | Jan 14, 2020 | Articles, Blogs, Learn | 0 comments. Managers can increase the production capacity of any plant or find out the optimum production capacity, efficient management of work and employee performance, limit the wastage of resources, etc. Nevertheless, some common applications of predictive analytics include fraud detection and security, risk assessment, marketing, and operations. ... Business statistics is a science of intelligent decision making in uncertain situations and is applied in several disciplines such as econometrics, marketing research, auditing, financial analysis, production, and business operations. A business may buy hundreds of thousands of microchips, for example, so many that it would take years to inspect each one. This goes beyond reporting what has happened to create best estimates for what will happen. The business might then pull random samples from the order and perform statistical analysis to decide whether to accept or reject the microchips. Companies, from a statistical analysis, use a break-even model, which is constructed to determine the volume of sales necessary for the product to succeed. These stats highlight the importance of expanding your business over time if you want to significantly increase your profit margins and your chances of actually making a profit (see chart on the right).