APresentation
On“Application of
Statistics In
Business Decision Making”
• Every minute of working day, decisions are made by business around the world that determine whether companies will be profitable or not.
• Most of these decisions are made by the gathered information from market place, the economic & financial environment & also from other fctors.
Introduction to Statistics
What is Statistics?
• “Statistics is a science dealing with the
collection, analysis, interpretation &
presentation of numerical data.”
Scope
• Simplifying complex data.• Conversion of data into information and
make it more useful in decision making.• Quantifies and measures uncertainty and
variability and so helps in measuring risk.
• Discovers past and emerging patterns in a data. It helps in forecasting.
• Helps in estimation and validating assumptions
Basic use of Statistics
• Gathering, analyzing, interpreting & presenting data.
• Course of study.• Measurement taken on a sample.• By analyzing the data, can make
decisions easily.
Branches of Statistics
• Statistics can be divided into two branches:
Statistics
Descriptive statistics
Inferential statistics
Descriptive statistics
• If a business analyst is using data gathered on a group to describe or reach conclusions about that same group, the statistics are called descriptive statistics.
• E.g. The instructor can use these statistics to discuss class average, range of class scores etc.
Inferential statistics
If a researcher gathers data from a sample & uses the statistics generated to reach conclusions about the population from which the sample was taken, the
statistics are inferential statistics.
Statistics in Business
Every area of business uses statistics in decision making. Best way to reach to the market:
survey, direct mail, catalogs etc… Reducing the stress on job:
conducting various types of survey by using various statistical techniques.
Cont…
Taking various types of financial decisions such as, expansion, Merger & acquisitions, new product or service launch, technology upgrade etc..
Economic decisions such as calculating the GDP rate, unemployment rate, predict the future business climates.
Impact of Technology such as, Internet survey, Graph analysis, Inexpensively analysis of data.
Applications of statisticsEconomics: Formulation of economic policies, econometrics
Finance: Helps in value at risk, stock market-derivative
Insurance: Based on concept of probability
Operations: Inventory, SQC, six sigma method
Applications of statisticsHR:
performance evaluations,Feedback of training program
IT:Optimization of server time,Testing software
Data mining:Specialized branch of combination of IT
& StatisticsIt is used in all fields of business
Applications of statistics in various areas
Marketing: Philip Kotler and Gary Armstrong state: “ identifying customer needs and wants,
determines which target markets the organizations can serve best and designs appropriate products, services and programs to serve these markets.”
Statistical methods helps in forecasting sales, market share and demand for various types of industrial products
Some statistical techniques and their applications
Normal distribution
equity research finance marketing production engg project management
risk management performance appraisal six sigma PERT/CPM
Sampling market research consumer survey
Testing of Hypothesis
Agriculture, paramedical, Pharmaceutical
testing a fertilizer, testing a drug, testing of drug, clinical trial
Decision theory Finance Investment and portfolio selection
Forecasting HRD
Insurance
Marketing
manpower planningDetermining premiumDemand forecasting
Discriminant Analysis
Finance, Marketing
Credit risk analysis, Customer profile
Some statistical techniques and their applications
Limitations of statistics
It does play very important role as discussed
but it has to be implemented by well defined objectives, scientific collection of data, appropriate assumptions and analysis.
Scarcity of any of the above leads to wrong conclusion