Written by Before we go into the definition of business statistics, let’s be aware that the word business statistics comprises two words namely; business and statistics.
Business can be defined as an economic activity that man engages in order to earn a living.
It has to do with the production and distribution of goods and the rendering of services.
Anything called business must solve problems and one of the aims of business activity is profit maximization.
A business may be a commercial, industrial or professional activity.
Statistics, on the other hand, is the science of collecting, analyzing, presenting and interpreting data.
It is a discipline that deals with the collection, organization, analysis, presentation and interpretation of data.
It is also the total collection, tabulation, presentation, analysis and interpretation of a given set of data.
Taken together, we can define business statistics as the collection, tabulation, presentation, analysis and interpretation of a given set of data relating to business.
It is the collection of techniques used to convert data into meaningful information in the business environment.
Business statistics is also the application of statistics to analyze business data.
It is the application of statistical techniques to analyze and understand business-related data.
It involves the collection, analysis, interpretation, presentation, and modelling of data in order to identify patterns and relationships and to make informed business decisions.
Companies and investors use business statistics to forecast, test correlations and describe data.
People with strong mathematics skills can take business statistics as a career.
Types of Business Statistics
There are two major types of statistics namely; Descriptive statistics and inferential statistics.
1. Descriptive statistics: This show and summarize the basic features of a data set found in a given business study.
It is presented as a summary that describes the data sample and its measurement.
Descriptive statistics is the study of statistics which is concerned with the description of general characteristics of a given business data.
It does not make any effort to study deeply business data to arrive at a reasonable conclusion.
Descriptive statistics is only concerned with the description of data using charts, graphs, and other numerical measures.
2. Inferential statistics: This makes use of measurement from the samples of a business study to draw inferences or conclusions from a given data set.
Inferential statistics critically compare the business data before making generalizations.
It makes one come to conclusions and make predictions based on given business data.
Inferential statistics is concerned with studying deeply, the general characteristics of a given business data to arrive at a reasonable conclusion.
It involves thorough analysis and interpretation of data.
Characteristics of business statistics
1. Business statistics are numerically expressed.
2. Business statistics must have aggregate facts.
3. Data are collected in a systematic order.
4. Data should be comparable to each other.
5. Data are collected for a planned purpose.
Importance of business statistics
1. It enables managers to analyze past performance: Business statistics provides managers with data that they used in analyzing the past performance of the organization.
Business statistics provides managers with a more comprehensive understanding of the past performance of the business, which enables them to identify areas where they can improve, and develop strategies to capitalize on their strengths.
2. Prediction of future business practices: Another importance of business statistics is that it helps managers forecast and predict future business practices accurately.
Business statistics provide managers with data about past trends and patterns, which serves as valuable insights as to what may happen in the future.
3. Accurate decision-making: The use of business statistics in decision-making can lead to a more accurate and successful outcome for businesses.
When managers have access to accurate and reliable data, they can make informed decisions based on evidence rather than intuition or guesswork.
Business statistics provides the information that managers need to make decisions, thus reducing the risk of making poor decisions.
4. Achievement of objectives: The use of business statistics can help organizations achieve their objectives by identifying their strengths and weaknesses, setting realistic goals, and monitoring progress towards those goals.
5. Provision of information: Business statistics help to provide necessary information to the organization.
It provides information relevant to the decision at hand, which is crucial for making informed decisions.
It also provides information to both internal stakeholders (employees and managers) and external stakeholders (customers, suppliers, and investors) of the business.
Limitations of business statistics
1. General view: Business statistics deals with groups and aggregate data only. Hence, it can only provide a general view of the matter.
Data is typically collected and analyzed at a group or aggregate level, rather than at an individual level.
This means that the results are often generalizations that apply to the group as a whole, rather than specific insights into individual behaviours or preferences.
2. Unsuitable for qualitative decisions: Statistical method is best applied to quantitative data, which limits its usefulness when businesses are faced with quality decision-making problems.
Businesses at times are faced with quality decision-making problems that cannot easily be solved using statistical methods.
These types of problems often involve subjective judgments or qualitative data that cannot be easily measured or quantified.
Therefore, When faced with qualitative decision-making problems that involve subjective judgments, businesses may need to supplement statistical analysis with other research methods and expert judgment to make decisions.
3. Data may be misleading: Statistical analysis relies on accurate and representative data to draw meaningful insights and conclusions.
If sufficient care is not taken in collecting, analyzing and interpreting the data, statistics results might be misleading.
Furthermore, a little mistake in collecting the data can render aggregate data useless.
This is because aggregate data relies on accurate and representative data to provide meaningful insights. If the data is incorrect or incomplete, the aggregate data will also be incorrect or incomplete.
4. Business statistics is not easy to prepare: Preparing statistical analysis can be complex and time-consuming.
This is because statistical analysis involves a series of steps, such as data collection, data analysis, and data interpretation.
Each of these steps requires careful attention to ensure that the statistical analysis is accurate and reliable.
Therefore, business statistics is not easy to prepare.
Conclusion
To summarize, business statistics is a collection of techniques used to convert data into meaningful information in the business environment.
It involves the collection, analysis, interpretation, presentation, and modelling of data to identify patterns and relationships that will help individuals make informed business decisions.
Descriptive statistics and inferential statistics are the two major types of statistics. The former summarizes the basic features of a dataset found in a given business study, while the latter draw inferences or conclusions from a given dataset.
The characteristics of business statistics include numerical expression, aggregation of facts, systematic data collection, comparability of data, and collection for a planned purpose.
The importance of business statistics lies in enabling managers to analyze past performance, predict future business practices, make accurate decisions, achieve objectives, and provide the necessary information.
However, the limitations of business statistics are that it provides only a general view of the matter, is unsuitable for qualitative decisions, data may be misleading, and preparation can be complex and time-consuming.
