Students learn in school how to take a list of numbers, order them from least to greatest and find the mean, median and mode, which are simple statistical tools. The ability to find the mean, or the average, of a list of numbers, is in itself an advantage in business. When summarizing numerical data using statistical methods, enhancing understanding of the company’s actual conditions is possible.
Statistics have many applications in business, such as in a manager’s role in performance management. A manager collects data about employee productivity, such as the number of tasks completed or the number of units produced. He must analyze data to find ways in which an employee should improve to achieve maximum productivity. For example, if a manager finds that an employee’s number of finished outputs drops by 20 percent every Friday, he should communicate with the employee, setting the expectation that her output will remain above a minimum level every day of the work week.
Beyond managing the performance of her own workers, a manager participates in joint decision making with other managers. Statistics help the managers to compare alternative scenarios and choose the best option for the company. The team must decide which software to use for automating the customer ordering process. They consider which software products have been successfully used by competitors and choose the most popular one, or they might find how many orders that an ordering system can process on average daily. The team collects performance data from software makers and independent sources, such as trade magazines, to inform their purchasing decisions.
Collecting data to use in statistics, or summarizing the data, is only an advantage in business if a manager uses a logical approach and collects and reports data in an ethical manner. For example, he might use statistics to determine if sales levels the company achieved for the last few products launched were even close to projected sales levels. He might decide that the least-performing product needs extra investment or perhaps the company should shift resources from that product to a new product.
Research and Development
A company also uses statistics in market research and product development, using different surveys, such as random samples of consumers, to gauge the market for a proposed product. A manager conducts surveys to determine if there is sufficient demand among target consumers. Survey results might justify spending on developing the product. A product launch decision might also include a break-even analysis, such as finding out what percentage of consumers must try a new product for it to be successful.
Written by: Audra Bianca