Assignment Paper

How statistical theory and application assists business to formulate and design strategies?
• Concept of Business Statistics
• Use of central Tendance in Business
• Use of Probability in Business

Submitted To:

Md. Rakibul Hassan

Associate Professor
Department of Marketing
Jahangirnagar University

Submitted By:

Shuvo Sharma
ID: 20202098

Course name: Business Statistics, EMBA-507

Section: D, Spring 2021

Date of Submission: 30th September 2021

Summary of the Assignment:
Statistical analysis is the collection and interpretation of data in order to uncover patterns and trends. It is a
component of data analytics. Statistical analysis can be used in situations like gathering research
interpretations, statistical modeling or designing surveys and studies. It can also be useful for business
intelligence organizations that have to work with large data volumes.

In the context of business intelligence (BI), statistical analysis involves collecting and scrutinizing
every data sample in a set of items from which samples can be drawn. A sample, in statistics, is a
representative selection drawn from a total population.

The goal of statistical analysis is to identify trends. A retail business, for example, might use statistical
analysis to find patterns in unstructured and semi-structured customer data that can be used to create a more
positive customer experience and increase sales.
Contents
Business Statistics: ...................................................................................................................................... 4
Benefits and Uses of Statistics in Business Organization: ......................................................................... 4
Use of central Tendance in Business: ........................................................................................................ 5
Central Tendency ...................................................................................................................................... 5
Probability in Business: .............................................................................................................................. 6
What is Probability: ................................................................................................................................... 6
Importance of Probability in Business Administration: ............................................................................ 6
Conclusion: .................................................................................................................................................. 7
Reference: .................................................................................................................................................... 8
Business Statistics:
Statistical research in business enables decision makers to analyze past performance, predict future business
practices and lead organizations effectively. Statistics can describe markets, inform advertising, set prices,
and respond to changes in consumer demand.

Descriptive analytics look at what has happened and helps explain why. By using historical data, decision
makers can analyze past successes and failures. This is also called “cause and effect analysis.” Some
common applications of descriptive analytics include sales, marketing, finance, and operations.

Benefits and Uses of Statistics in Business Organization:

In general, statistics will help to identify trends that escape notice without any methods. The analysis also
injects objectivity into decision-making. With good statistics, inward decisions are not necessary.

statistical analysis also helps with market analysis. The statistics show where the most sales happen, where
the sales have the most value and what marketing is attached to those sales. It allows for improved efficiency
in every aspect of sales and marketing.

Likewise, statistical analysis also can help with work efficiency. In many cases, providing the right tools
will get the best work out of employees. Statistical analysis will allow employers to carefully scrutinize the
effectiveness of each tool and focus on those with the best performance.

There are several ways in which statistics plays a role in business.

• Management Of Performance – As mentioned earlier, the importance of statistics in management

is significant; with the help of statistics, a decision makers can analyze the performance or the
productivity of employees like the units produced, or the task completed. The decision makers can
use the data in sync with statistical techniques to improve the productivity of the workforce and
multiply the production.

• Alternative Scenarios – The task or the function of a decision makers does not end after increasing
the productivity of the employees. A decision maker has to participate with the other managers
from different department for decision making. The decision can be on the choice of particular
software, systems for customer automatic ordering systems, etc.

• Data Collection – The data that is collected for the purpose of processing with the statistical tools
must be done in an ethical manner, otherwise, the result of the analysis will be false and non-
beneficial. With the help of these data, comparisons can be drawn if the actual sales were less or
more than the projected sales or the future capital requirement for the fulfilment of a huge order.

• Research And Development – The scope of statistics in business also extends to market research
and product development. This is one of the most important functions of statistics, as a sample
group is observed and their response to a product is tested, and data collected. This data is essential
in the determination of the launch of new products and the development of it.
Use of central Tendance in Business:

Central Tendency

Measures of Central Tendency helps in identifying the single value around which all the data in a group
(observations) have a tendency to cluster. Simply, a measure of central tendency is the value considered as
the most representative figure of the entire data set.

A measure of central tendency helps in identifying the center of all the observations and therefore is also
called as Statistical Averages or Averages or Measures of Central Location. The central tendency
helps in condensing the large data into a single value that represents the entire data set. Thus, central
tendency is very useful when the data under study is very large.

A measure of central tendency also helps in comparing one data set with another. Such as if there are
two samples of girls studying in two different schools and their marks in class 12th are needed to be
compared. Then by calculating the average marks for each sample an easy comparison between the girls
can be drawn.

Also, the central tendency helps in comparing one value of data with the entire data set. For example,
if a boy obtained 50% marks in science can compare with the average marks obtained by each student to
find out where he stands in class.

Basically, there are three important measures of central tendency:

1. Mean: The mean is the most common measure of central tendency. It is the value obtained by
dividing the sum of all the observations by the number of observations in the dataset.

Symbolically:

2. Median: The median is a positional average, basically used in the context of qualitative data,
such as intelligence, etc. It divides the data into two equal parts where half of the items are less
than the median while the half of the part is greater than the median. Therefore, the data set is
first arranged in either the ascending order or the descending order. Such as, if the number of
observations in the dataset:

a) ‘n’ is odd:

b) ‘n’ is even:
 3. Mode: In a data set, the most frequently occurring item or observation is mode. For example, a
manufacturer of cloth wants to know the size which most frequently ordered by the customers so
that he can manufacture a large quantity of that size.

Probability in Business:

What is Probability:
Probability denotes the possibility of the outcome of any random event. The meaning of this term is to
check the extent to which any event is likely to happen. For example, when we flip a coin in the air, what
is the possibility of getting a head? The answer to this question is based on the number of possible outcomes.
Here the possibility is either head or tail will be the outcome. So, the probability of a head to come as a
result is 1/2.

Importance of Probability in Business Administration:

Probability has a popular meaning that is not the same as the mathematical meaning. As a small-business
owner, you may act on hunches, guesses and instincts. After such actions, you might even say you thought
a certain outcome was "probable." However, the mathematics of probability has rules that you can use in a
much more disciplined way than guesswork to predict possible outcomes for our business plans.

Classical Approach

The classical approach to using probability depends on several future events that are equally likely to
happen. In rolling a die, for example, the odds are equally likely for rolling a 1, 2, 3, 4, 5 or 6. If you roll
the die once, you have a 1 in 6 chance of getting the number you want. The formula is the number of
favorable outcomes divided by the total number of possible outcomes. Note that if you roll the die twice,
the odds are 2 in 12 that you will get the number you want (this is the same value as 1/6). This is because
the possible outcomes double if you throw the die twice.
Using the Classical Approach in Business Administration

You can use the classical approach to probability when making business decisions where you don't know
the likelihood of several possible outcomes. You assume they are all equally likely, then look at how many
attempts you will be able to make. However, in your business, if 6 possible outcomes are equally likely,
but they are not affected by how many times you try, you can cut your odds in half with repeated effort.
For example, if you make 2 tries, your effort will have a 2 in 6 chance. Notice that 2/6 = 1/3. You have
moved from a 1 in 6 chance of success to a 1 in 3 chance.

Relative Frequency Approach

The relative frequency approach uses the past to make predictions about the future. You look at how many
times an event has happened and then look at how many opportunities exist for the event to occur. The
formula is the number of times an event occurred divided by the total number of opportunities for the event
to occur.

Using Relative Frequency Approach in Business Administration

You can use relative frequency to improve your business decisions. For example, if your research shows
there are 75 failures for every 100 business startups attempted, you would say that 75 out of 100 startups
fail. This reduces to 3/4. That would mean 3 out of 4 startups fail. If you don't do something to change your
odds, you can expect that failure probability. This mathematical reality can give you a sense of urgency in
your efforts to be the 1 out of 4 that succeeds. In fact, you could study the successes to see how they changed
the odds in their favor.

Conclusion:
When we seeking to understand business statistics or statistical techniques in business and economics, we
must operate from a foundation of the more precise methodology of statistics. Broadly speaking, this means
dealing with “gathering, selecting, and classifying data; interpreting and analyzing data; and deriving and
evaluating the validity and reliability of conclusions based on data.”

Applying the science of statistics to the more specific field of statistical analysis for business is more crucial
than ever in an era heavily defined and driven by data. Businesses and organizations are constantly working
to make sense of and utilize much of the 2.5 quintillion bytes of data being generated worldwide each day.
The only way for any business to do that effectively is to rely on statisticians trained in statistical techniques
in business and economics.
Reference:

• https://whatis.techtarget.com/definition/statistical-analysis
• https://learn.g2.com/statistical-analysis
• Statistics for Management by Richard Levin and David S Rubin., Prentice- Hall India
• Statistical Techniques in Business and Economics 17th Edition by Douglas Lind and William Marchal
and Samuel Wathen.
• https://degree.lamar.edu/articles/undergraduate/how-are-statistics-used-to-make-business-
decisions/