The Advantages Of Statistics In Business
In business, statistics can be applied in so many ways to ensure smooth running of the business, in fact in each and every day of a business’s life cycle statistics must be applied. Business statistics is a science of mathematics used in analysis of data and it is mainly divided into two including descriptive and inferential statistics. Descriptive statistics is mostly used in decision making and in aiding business managers to supervise most of the business activities since it describes and summarizes total numbers while inferential statistics are mostly used by managers in making final decisions and conclusions based on incomplete or limited data. Inferential statistics is also majorly used in predicting a business’s future. Basic statistics used in businesses includes measuring mean, mode, average and median such simple mathematics that is taught in schools is what is applied in businesses. Knowing what statistics is all about, let us now get into the advantages of statistics in business.
- Eases performance management and evaluation
The use of statistics in business enables managers to handle their role better by making evaluation of performance and performance management easier. This is done through managers gathering data about a worker’s performance basing on the number of responsibilities accomplished or amount of output delivered. After data being collected, managers can then evaluate to find out areas that are being problematic or those areas that require improvement in order to gain the best out of your business. Such analysis can be really difficult without including statistics and the longer it takes for managers to notice where the problem is coming from, the more the business ends up falling more and more into losses. Therefore one would be totally right to conclude that performance evaluation and management has become very simple with statistics.
- Comparison of alternatives
Because a business includes more than just one person, there will always be so many ideas proposed that senior members or the management team need to discuss and choose from. In such cases, statistics assists the members responsible in making perfect comparisons to choose that alternative that will greatly benefit the business. Making use of statics helps managers to find out which machines that companies doing better are installing, they can find out how to make work easier for their employees through automation of some systems and also estimate how much they must produce in order to make their customer base totally satisfied each and every day. To make accurate comparisons a business manager uses data provided by other businesses in competition on their websites, magazines and even from inner sources.
- Research and development
The perfect shortcut to success is research, if all businesses spent more time and resources on research, the world would be filled with only excellent organization and companies. Through different forms of statistics such as questionnaires, surveys and taking indiscriminate samples, business are able to gather enough information about which market to hit and how best to develop their products or services. These surveys always help a manager to find out which products they are investing in too much yet it is not high demanded for or those that are not properly invested but are greatly demanded by a large part of the market. Many of the businesses that are growing and developing more and more every other year do a lot of research which can only be perfectly done with statistics. This is because research enables businesses to be practical even with consumer’s ever changing demands and their behavior when product prices go high.
- Collection of factual data
Businesses make most of their decisions if not all of them basing on data collection reason being it is only with that data that one can be able to discover whether the anticipated amount of productivity is reached or not. Statistics eases data collection and analysis and thus helps businesses set their goals and aims basing on real time information. For example in companies that deal with supply of products, statistics helps managers to know which products are most profitable in order for them to invest in the even more and those that are no longer on demand. It also helps to measure the difference between the attained productivity rate and the prospected productivity rate.
- Projection of future events
With the use of statistics it is very possible to predict events that might come about in the future, it is always wise to be ready for any risk factors that might come up in the future so that when actually happen your business will not be too much affected. In order to make the perfect estimate to future possibilities it is absolutely essential to involve statistics into the business. And besides predicting what the future might hold, statistics will also help you to make the perfect plan or budget for the future, this is the clear identity of a business that intends to grow.
- Keeps the business in operation
For businesses that overly depend on information technology it becomes quite easy run out of operation just in case of an emergency such for example system breakdowns since it is difficult to make an estimate of what might happen away from the present moment. On the other hand businesses that depend on statistical data are always aware of what might take place in the future so even when situations go wrong they continue to operate. Using statistics it is always easy to find out the real cause of a risk factor so that managers find a solution before it bring serious damage to the business.
- Helps businesses in building long term goals
In directing your business the most important thing is statistics as it helps you to build long term goals, remember businesses cannot only survive on the short term goals. Statistics always show what expenses, revenues and taxes are expected to be in about 10years time from the present day and this helps businesses to set their goals accordingly. With the help of statistics the management team can then adjust and set business goals depending on the new market, products that are estimated to be highly on demand by then and the possible market.
- Aids in strategic advertisement
Statistics is used in evaluation of the market so that advertisers know where exactly they have to put their effort in order to maximize profits. With the use of statistics, individuals are able to identify what products the consumers are demanding for and what their behavior is like and there after use this data to advertise strategically instead of wasting time and effort advertising without any guidance. Analyzing data from questionnaires, interviews and surveys managers are more than sure of which market will profit them the most so that they cut down on costs of advertisement.
- Attracting customers
People are easily attracted by numbers so smart marketers can use the best of the company statistics to attract more and more customers. For example while advertising the organization nit it important to provide some important statistics that will entice people to become a part of your organization like how long many years you have spent in operation, how many customers have given review about the products and services provided. Such statistics attract people into trying out your product.
LIMITATIONS OF BUSINESS STATISTICS
All businesses need require statistics for their operations to be successful because of the accuracy it brings about in laying out plans, decisions and evaluation performance however there are so many issues that have limited some businesses from making use of statistics. These limitations make it very hard for some businesses owners to enjoy the advantages of statistics.
- Estimated frequency; In businesses, statistics are done basing on an estimated frequency which may not be necessarily what the consumer wants to know and this in the end may lead to results with errors. For example a company that deals in production of plastics may be told that the best quality plastic should be between 2mm and 3mm of thickness but such figures don’t exactly what must be used and this is why some businesses choose to end up ignoring using statistics in their businesses. And making frequency based estimates is also quite wrong simply because every organization has their own policy or standards so what works for one company may not be exactly what works for another.
- Hard to understand; studied and research have discovered that mathematics is one of the most difficult subjects for many students and statistics being a science of mathematics is also equally hard to understand for many people. Statistics involves lots of figures which are quite confusing for people. Some businesses have adapted soft ware to help out in dealing with statistics but those small businesses that cannot afford soft ware find it extremely difficult to engage statistics into their business.
- Limited sample sizes; statistics done basing on small samples make people dealing with larger businesses work with in accurate estimates, this is because measurements done basing on a small sample might turn out completely different when used on samples that are large.
- Misuse of statistics; company that tend to compare their productivity with other companies may end up into losses if they are comparing with did not provide accurate results. This is actually quite common, some businesses use wrong figures just to get the attention of customers so they end up misleading other people into using the wrong statistics and thus get the wrong results.
APPLICATION OF STATISTICS IN BUSINESS
There are different ways in which people can use statistics in business and below are some p the commonest ways in which statistics is used in business;
- Advertisement; statistics is majorly applied in advertising so that investors know where is exactly to invest their money and get the best out of it. statistics is used in finding the perfect audience to advertise to and choosing the best design to use when selling it out to the public.
- Performance evaluation; keeping statistics of how members perform in the past years and how they are performing currently enables managers to notice those are improving every other time and those that are declining. With that they can also discover the cause of those workers with deteriorating performance and thus find the perfect solution to it.
- Decision making; with every decision made, one must know that it could either boost the business highly or crush it down that is why some statistical evaluation is always applied in business decision making. There are lots of considerations that must be included before actually concluding on a decision and when statistics is applied it becomes much easier to select a decision that is most likely to turn out excellent for the business.
- Market research; in order to discover which is the best market to target businesses use statistics to identify a portion of the population that highly interested in what they have to offer and how much they need to invest to hit the target market by meeting their demands. Market research is in fact the area in which statistics are highly applied. The main essence of applying statistics in market research is to discover how much is demanded by the consumers compared to how much the business is ready to offer.
- Future forecast; businesses operators use data from the past and compare it with the present to come up with future prospects of what can come out of the business. Businesses that plan to grow and remain in operation over long periods of time make use statistics in order to estimate what the future might hold and what they have to do to meet the future expectations.
- Profit analysis; without analyzing profits, there is no way one can know if they are actually developing or not, it therefore this need to understand the rate at which the business is growing that makes people involve statistics in their businesses.
In conclusion, in a business statistics is one of those unavoidable factors because it helps to plan out the future of the business, how best it should operate to achieve its goals and also helps to find solutions to the problems. Every business need to use statistics to excel.