Business statistics involves using data to make decisions in uncertain situations. It is used in finance, marketing, and customer service departments. Techniques include descriptive statistics, probabilities, hypothesis testing, and linear regression. Understanding and applying business statistics can give businesses a competitive edge.
Business statistics is the science of using data to make good decisions in the face of uncertainty. Different departments typically use business statistics, such as finance, marketing, and customer service. Statistical techniques commonly found in businesses include the use of descriptive statistics, probabilities, binomial and normal distributions, hypothesis testing, confidence intervals, linear regression, and correlation.
Managers often use business statistics when predicting or making decisions that involve a level of uncertainty. It takes a certain amount of skill and training to interpret and apply business statistics. Major businesses in the United States are generally required to complete a business statistics course before graduation. Understanding and applying business statistics can give managers and businesses a competitive edge.
Businesses that use statistics have a competitive advantage when making data-driven decisions. For example, if a manager believes an item will be obsolete in the future and wants to cut its price in half to sell out, he might find after running linear regression that the product will sell out at full price within two months. If you cut prices now, the company would reduce its profit margin for no reason. Also, managers typically calculate the mean or mean, when they should also consider the mode or median. Outliers may be present, making averaging and decisions based on that number inaccurate.
The most common departments that use business statistics include finance, marketing, and customer service. The finance department benefits from using business statistics to perform balance sheet analysis, forecasting, and correlations. Your marketing department can use it to forecast sales and demand, as well as look for trends and find the likelihood of a certain event occurring. Customer service can increase performance by using company statistics to determine which retention offers or techniques work best, as well as review staff performance.
The techniques used for business statistics vary by organization. Business schools teach their students descriptive statistics, probabilities, binomial and normal distributions, hypothesis testing, confidence intervals, linear regression, and correlation. Descriptive statistics include calculating and knowing when is the most appropriate time to use the mean, median, and mode. Probabilities and distributions are used to determine the likelihood of an event occurring. Hypothesis tests, confidence intervals, linear regression, and correlations are usually used when making predictions or testing whether a theory is true.
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