APPLICATION OF STATISTICS IN THE BUSINESS RESEARCH Aby Abdul Rabb, Nagercoil, India M.Com.,M.L.M., M.B.A.,M.Phil (Com) *********************************************************** I. INTRODUCTION Statistics is the science that deals with the collection, classification, analysis, and interpretation of numerical facts or data, and that, by use of mathematical theories of probability, imposes order and regularities on aggregate of more or less disparate elements. Statistics play a vital role in nearly all businesses and form the backbone for all future development Strategies. Every business plan starts with extensive research and this is all complied into statistics that can influence a final decision. Statistics aid development and learning hence, their role in business should never be underestimated .The traditional business model may not work without access to detailed statistical analysis and reporting. This assignment briefly explains the application of statistics in business research. A. Meaning:
The word statistics is used in two different senses. In plural sense statistics means data and in singular sense statistics is science which deals with the collection, presentation, analysis, and interpretation of some numerical data. B. Significance of Statistics:
Statistics is a particularly useful branch of mathematics that is not only studied theoretically but one that is used by researches in many fields to organize analysis and summarized data. Statistical methods and analyses are often used to communicate research findings and to support hypotheses and give reliability to conclusions.
II.
APPLICATION OF STATISTICS IN BUSINESS Statistics play an important role in business. A successful businessman must be very quick
and accurate in all situations and take decisions properly based on situations. Statistics helps businessman to plan production according to the taste of costumers. When all the activities of business run based on statistical method, the quality of the products can be checked more efficiently by using statistical methods. So all the activities of the businessman based on statistical information. Based on the trend of the statistics, a businessman can make correct decision about the location of business and the different products to be manufactured. 1
In today's global business and economic environment, anyone can access vast amounts of statistical information. The most successful managers and decision makers understand the information and know how to use it effectively. The following are the examples that illustrate some of the uses of statistics in business research. 1) Accounting:
The Public accounting firms use statistical sampling procedures when conducting audits for their clients. For instance, suppose an accounting firm wants to determine whether the amount of accounts receivable shown on a client's balance sheet fairly represents the actual amount of accounts receivable. Usually the large number of individual accounts receivable makes reviewing and validating every account too time-consuming and expensive. As common practice in such situations, the audit staff selects a subset of the accounts called a sample. After reviewing the accuracy of the sampled accounts, the auditors draw a conclusion as to whether the accounts receivable amount shown on the client's balance sheet is acceptable 2) Finance:
Financial analysis uses a variety of statistical information to guide their investment recommendations. In the case of stocks, the analysis reviews a variety of financial data including price/earnings ratios and dividend yields. By comparing the Information for an individual stock with information about the stock market averages, a financial analyst can begin to draw a conclusion as to whether an individual stock is over- or underpriced. 3) Marketing:
Electronic scanners at retail checkout counters collect data for a variety of marketing research applications. For example, data suppliers and Information purchase point-of-sale scanner data from grocery stores, process the data, and then well statistical summaries of the data to manufacturers. Manufacturers spend hundreds of thousands of dollars per product category to obtain scanner statistics and the promotional activity statistics to gain a better understanding of the relationship between promotional activities and sales. 4) Production:
Today's emphasis on quality makes quality control that important application of statistics in production. A variety of statistical quality control charts are used to monitor the output of a production process. In particular, a v-bar chart can be used to monitor the average output. Suppose, for example, that a machine fills containers with 12 ounces of a soft drink. Periodically, a production worker selects a sample of containers and computes the average number of ounces in 2
the sample. This average, or the value, is plotted on a v-bar chart. A plotted value above the chart's upper control limit indicates overfilling, and a plotted value below the chart's lower control limit indicates under filling. The process is termed ""in control"" and allowed to continue as long as the plotted v-bar values fall between the chart's upper and lower control limits. Properly interpreted, a v-bar chart can help determine when adjustments are accessary to correct a production process. 5) Economics:
Economists frequently provide forecasts about the future of the economy or some aspect of it. They use a variety of statistical information in making such forecasts. For example, in forecasting inflation rates that economist's use statistical information on such indicators as the Producer Price Index, the unemployment rate, and manufacturing capacity utilization. These statistical indicators often entered into computerized forecasting models that predict inflation rates.
III.
SOME STATISTICAL METHODS PLAYS A ROLE IN BUSINESS
There are lots of methods in statistics .Different methods are used in different research works. This assignment denotes some methods which plays different roles in different business researches. 1) Measures of Central Tendency:
The central measures are three types such as Mean, Median and Mode. A.
M ean :
It is called as average value. This average value is used to identify the nature
of data and to estimate estimate the value of data. Ex :Performance of employees in a year of a company. B.
M ode ode :
The observation which occurs maximum number of times is called the mode
of the given data. Example: Daily wages of 40 workers in a cement factory are given below. Find the mode of the data. Daily wages in rupees
100
125
150
175
200
No. of workers
8
14
6
9
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Sol: Here the maximum frequency is 14 then the daily wage is 125. i.e 14 workers are get high daily wage of 125 rupees. 2) Correlation:
Correlation is another most useful statistical statistical method .These belongs to the most most common useful statistical tools to compare effects and performances of variables. Correlation analysis is
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applied to independent factors: If X is increases, What will Y do. In Regression analysis Changes in X results Changes in Y but Changes in Y do not results in changes in X. To discover whether there is a relationship between variables. To find out the direction of the relationship-whether it is positive negative or zero. This measure varies from 0 to 1 and 0 to1.The test statistic correlation coefficient measures the strength of the relationship between the two variables. Ex:
1) Find the relationship between the net profit and cash flow 2) What is relationship between sales persons and n umber of sales.
3) Index Numbers:
This technique used to compare the differences of the present year product values and previous year product values. 4) Time Series:
The time series analysis is a very important statistical tool which is used in business for the study of Trend in order to obtain the estimates of the probable demand of the goods. Seasonal and cyclical movements in the phenomenon for determining the business cycle. 5) Sampling Techniques:
The sampling techniques are most useful in business side and medical oriented side. Population means whole data we have and Sample means some small part in that whole data. There are two types of sampling techniques such as large sample test and small s mall sample test. Large Sample Test :- The sample size is denoted by b y ‘n’. If n>=30 that is called as Large sample.
EX: In MNC companies there are more than 10000 employees are working. We checking the performance of employees. Small Sample Test :-The sample size n<30 is called small sample test. Ex: A small scale industry
with employees 24 in that we check performance of employees. 6) Parametric and Non Parametric Tests: Parametric Tests : T, F, Z are parametric tests. Because the formulas in these techniques depends
by mean, variance, standard deviation for testing the problems. Non parametric tests:
Chi square test is one of the the simplest and most widely used non-
parametric tests A non-parametric test makes no assumption about the parameters of the population from which the sample is drawn.
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7) Chi-Square Test:
Chi-square test is one of the simplest and most widely used non-parametric tests. A non-parametric test makes NO assumption about the parameters of the population from which the sample is drawn .Chi-square describes the magnitude of the discrepancy between theory and observation .chi-square test is useful to find whether two or more attributes are associated or not (i.e., independent). It is very popularly known as test of goodness of fit for the reason that it enables us to ascertain how appropriately the theoretical distributions such as Binomial, Poisson, and Normal fit empirical distributions. d istributions. It is also considered as a test of Homogeneity. Such a test is designed to determine whether two or more independent random samples are drawn from the same population or not. The following conditions must be fulfilled before applying the ch i-square test.
a). Sample size must be large preferably more than 50 items. b) Combining of or pooling of frequencies is to be made in case the expected frequency frequenc y of a cell is less than 5. c) The constraints on the cell frequencies shall be linear mainly the Chi-Square test is used to estimate the independent of attributes and goodness of fit.
CONCLUSION A business need to analyze, interpret and compare its performance. Statistical tool plays a role play an important role business research.
BIBLIOGRAPHY Creswell, J. Research design: Qualitative, quantitative and mixed methods approach. (2nd ed.), Thousand Oaks, CA: SAGE Publications, 2003. nd
Kothari, C. R. Research Methodology: Methods and Techniques. (2 Ed.), New Delhi: New Age International Limited, 2004.
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