Importance of Statistics in Business Organization
Statistics is one of the important areas of study because it is widely used in different aspects of our day-to-day life. Basically, statistics is collection, analyses, clarification, and presentation of data. It also serves a preserving function saving the data for future usage. Although statistics is utilized in many aspects, we will discuss the role of statistics in business management.
Statistics is crucial in terms of rating organizations, financial institutions, and financial markets. The use of statistics is limitless and extremely important without any exaggeration. With its help a skillful manager can increase employees performance, plant’s production capacity, limit the number of resources being wasted etc.
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Even such basic tools as mean, median, and mode, that most students get acquainted with at the university, can make a great difference. Let’s take a look top 3 ways that statistics can make a difference in business:
- Management of Performance – manager can analyze the performance of the employees and use this data to improve their productivity. Improved productivity will improve production and profits.
- Alternative Scenarios – manager’s job isn’t limited to increasing employees’ productivity and in many cases, managers participate in meetings with other supervisors from different departments to take joint decisions. Their decisions should also be based on objective statistical data.
- Research and Development – statistics plays an important role in product research and development. When the sample group is observed, their response is analyzed and this data is used in determining the launch of new products and their future modifications.
In the modern world, business decisions need to be made on the basis of empirical data. Here’s how decision making and statistics are related:
- The Big Picture – it assists to see a big picture with help of sample population analysis. A number of costs that can be saved on market research using statistical information is staggering. Statistics are cost effective and don’t require a lot of time.
- Support of Judgment – decisions that are rooted in actual empirical data have much more weight than decisions based on the intuition of people.
- Relationship – analyses of data allows establishing relationships between variables. It can be seasonal change’s effect on sales or discount’s removal effect on sales. Detailed statistical analysis can reveal preferences of consumers and their behavior patterns.
- Ensures Quality – outstanding examples of business oriented statistic is Lean Manufacturing and Six Sigma. Statistics helps to produce goods with limited wastage and variations saving money and ensuring the optimum use of resources while keeping highest levels of quality.
Today, you can rarely find a business which functions without the use of statistical tools and methods. Microsoft Excel is just one example of the most popular tool to store, organize, analyze and present data. In the future the number of these tools is going to grow, their quality is going to increase and ease of use should upsurge. Therefore, it’s a great time for any business to integrate and utilize intelligent statistical tools for the sake of their business’ success.