A

Presentation
On
“Application of Statistics
In
Business Decision Making”
 Introduction to Statistics
• Every minute of working day, decisions are made by
business around the world that determine whether
companies will be profitable or not.

• Most of these decisions are made by the gathered

information from market place, the economic &
financial environment & also from other fctors.
What is Statistics?
 Scope

• Simplifying complex data.

• Conversion of data into information and make it
more useful in decision making.
• Quantifies and measures uncertainty and variability
and so helps in measuring risk.
• Discovers past and emerging patterns in a data. It
helps in forecasting.
• Helps in estimation and validating assumptions
 Basic use of Statistics

• Gathering, analyzing, interpreting & presenting data.

• Course of study.
• Measurement taken on a sample.
• By analyzing the data, can make decisions easily.
 Branches of Statistics
• Statistics can be divided into two branches:
Statistics

Descriptive Inferential
statistics statistics
 Descriptive statistics
• If a business analyst is using data gathered on a
group to describe or reach conclusions about that
same group, the statistics are called descriptive
statistics.

• E.g. The instructor can use these statistics to discuss

class average, range of class scores etc.
 Inferential statistics

If a researcher gathers data from a sample & uses the

statistics generated to reach conclusions about the
population from which the sample was taken, the
statistics are inferential statistics.
 Statistics in Business
Every area of business uses statistics in decision
making.
 Best way to reach to the market: survey, direct
mail, catalogs etc…
 Reducing the stress on job: conducting various
types of survey by using various statistical
techniques.
 Cont…
 Taking various types of financial decisions such
as, expansion, Merger & acquisitions, new
product or service launch, technology upgrade
etc..
 Economic decisions such as calculating the GDP
rate, unemployment rate, predict the future
business climates.
 Impact of Technology such as, Internet survey,
Graph analysis, Inexpensively analysis of data.
 Applications of statistics
Economics:
Formulation of economic policies, econometrics

Finance:
Helps in value at risk, stock market-derivative

Insurance:
Based on concept of probability

Operations:
Inventory, SQC, six sigma method
 Applications of statistics
HR:
performance evaluations,
Feedback of training program
IT:
Optimization of server time,
Testing software
Data mining:
Specialized branch of combination of IT &
Statistics
It is used in all fields of business
Applications of statistics in various areas
Marketing:
Philip Kotler and Gary Armstrong state:
“ identifying customer needs and wants, determines which
target markets the organizations can serve best and designs
appropriate products, services and programs to serve these
markets.”
Statistical methods helps in forecasting sales, market share
and demand for various types of industrial products
 Some statistical techniques and their
applications
Normal distribution equity research finance marketing risk management
production engg project management performance appraisal
six sigma PERT/CPM

Sampling market research consumer survey

Testing of Hypothesis Agriculture, paramedical, testing a fertilizer,

Pharmaceutical testing a drug, testing
of drug, clinical trial

Decision theory Finance Investment and

portfolio selection
 Some statistical techniques and their
applications
Forecasting HRD manpower planning
Determining
Insurance premium
Demand
Marketing forecasting

Discriminant Finance, Marketing Credit risk analysis,

Analysis Customer profile
 Limitations of statistics
It does play very important role as discussed
but it has to be implemented by well defined
objectives, scientific collection of data,
appropriate assumptions and analysis.
Scarcity of any of the above leads to wrong
conclusion