Statistics for Business
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Statistics is defined as the “collection, organization, analysis, and interpretation of various data” for the purpose of business, scientific, or marketing decision making (Lind, Marchal, & Wathen, 2011). In business there are two types of statistics used known as descriptive and inferential statistics (Cooper , 2014). Descriptive statistics utilizes data in the form of numbers which seeks to find patterns in the data. In contrast to descriptive statistics, inferential statistics uses sample data taken from segments of populations which is then extrapolated to the whole. Using both forms of statistics allows businesses to make better decisions through being able to see that data from different perspectives.
There are several methods of collecting data in statistics including: experimental, observational, interviews, and questionnaires. These methods utilize different data measurement scales that include: nominal, ordinal, interval and ratio (Cooper, 2014). These measurement scales are used to categorize variables in different ways. If a variable is measured on the lowest nominal scale for example, red, blue, male, female, etc… arithmetic operations are not possible (Cooper, 2014). If a variable is measured on the nominal scale for example, rank order or the “bad, medium, good” type of data), arithmetic operations are possible due to a variable being designate such 1–4 being unhappy to happy (Cooper, 2014). Interval scales are numeric scales where the order is known as well as the exact differences between the values (Cooper, 2014). For example, when measuring data associated with temperature, the degrees of temperature are known (Cooper , 2014). However, there is no absolute zero which makes determining a median or central tendency somewhat more difficult. Ratio scales are measurement scales that measure order, show exact values and have an absolute zero point (Cooper, 2014). An example of ratio variables can be seen in height to weight comparisons (Cooper, 2014).
In business, statistics are used for many different aspects of decision-making. Statistics can be used to determine the value of a proposed business endeavor or to determine the viability of different processes and operations (Lind, 2011). Often businesses use statistical data to determine marketing strategies based on market trends revealed in statistical analysis such as sales of specific products being larger than other products. Statistics aid in managerial decision-making in all departments from accounting, production, to marketing because they can provide direction for improvement.
Cooper , D. R. (2014). Business research methods (12ed.). New York, NY: McGraw-Hill/Irwin.
Lind, D. A., Marchal, W. G., & Wathen, S. A. (2011). Basic statistics for business and economics (7th ed.). New York, NY: McGraw-Hill/Irwin.
Vincent Triola. Sat, Feb 06, 2021. What are business statistics? Retrieved from https://vincenttriola.com/blogs/ten-years-of-academic-writing/what-are-business-statistics