Business statistics what and why

Business Statistics
What and Why

Introduction
 The word “statistics” is very popularly used in
practice. It conveys a variety of meanings to
people, many of which are inaccurate or, at
the very least, misleading.
 The average persons conceive of “statistics”
as column of figures, zigzag graphs or tables
like statistics of production, consumption, per
capita income, imports, exports, crimes,
divorce, share prices, etc.

 Such statistics are quite commonly found in
newspapers, journals, reports and one can
hear them on radio, television, classroom
lectures and so on.
 For example, one may find statements like
“the production of food grains is expected to
decrease from 192.3 m tones in 1997-98 to
183.2 m tones in 2002-03.

 In addition to meaning numerical facts,
“statistics” also refers to a subject, just as
‘mathematics’ as well as symbols, formulae
and theorems.
 Thus, the word ‘statistics’ refers either to
quantitative information or to a method of
dealing with quantitative information.

 The methods by which statistical data are
analyzed are called statistical methods.
 Statistical methods are applicable to a very
large number of fields- economics, sociology,
anthropology, business, agriculture,
psychology, medicine and education.
 Statistical methods are used by governmental
bodies, private business firms, and research
agencies as an indispensable aid in
i) forecasting ii) controlling and iii) exploring.

Definition
 There have been many definitions of the term
‘statistics’- indeed scholarly articles have
carefully collected together hundreds of
definitions, some have defined statistics as
statistical data whereas others as statistical
methods.
 Croxton and Cowden– “Statistics may be
defined as a science of collection,
presentation, analysis and interpretation of
numerical data.”

Statistical Methods
 There are five stages in a statistical
investigation:
1.Collection: Utmost care must be exercised in
collecting data because they form the foundation
of statistical analysis. If data are faulty, the
conclusion drawn can never be reliable. The
data may be available from existing published or
unpublished sources or else may be collected by
investigator himself.

2. Organization: Data from published sources
are generally in organized form. Data from
survey needs organization. The first step is data
editing so that the omissions, inconsistencies,
irrelevant answers and wrong computation in the
returns may be corrected or adjusted. The
second step is to classify data and the last step
is tabulation of data-arrange data in rows and
columns.

3.Presentation: After the data have been
collected and organized, they are ready for
presentation. It facilitates statistical analysis.
4. Analysis: Data are analyzed mostly in tabular
form. Methods used are numerous ranging from
simple observation of data to complicated,
sophisticated and highly mathematical
techniques.

5.Interpretation: Drawing conclusions from the
data collected and analyzed. It is a difficult task
and necessitates a high degree of skills and
experience. Correct interpretation will lead to a
valid conclusion of the study and thus can aid in
decision-making.

Statistics: Science or Art
 Whether statistics is a science or an art is often a subject
of debate. Science refers to a systematized body of
knowledge. It studies cause and effect relationship and
attempts to make generalizations in the form of scientific
principles or laws. It describes facts objectively and
avoids vague judgments as good as bad.
 Science, in short, is like a lighthouse that gives light to
the ships to find out their own way but does not indicate
the direction in which they should go.

 Art, on the other hand, refers to the skill of
handling facts so as to achieve a given
objective. It is concerned with ways and
means of presenting and handling data,
making inferences logically and drawing
relevant conclusions.
 If science is knowledge, then art is action.

Functions of Statistics
 Definiteness: To present general statements in a precise and
definite form. The sex ratio (i.e. number of females per 1000males)
is going up in Bangladesh.
The sex ratio has gone up from 927 in 1991 to 933 in 2001.
 Condensation: It simplifies mass of data into a few significant
figures.
 Comparison: It facilitates comparison.

 Formulating and testing Hypothesis: Statistical
methods are extremely useful in formulating and testing hypothesis
and to develop new theories.
 Prediction: Statistical methods provide helpful means of
forecasting future events.
 Formulation of policies: Statistics provide the basic
material for framing suitable policies. How much oil a nation should
import in 2005.

Business statistics what and why

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