Business use of statistics:

The inter-dependence of economies and the development of global markets has introduced new levels and sources of competition for business organisations. Businesses face new levels of risk as the markets in which they operate become more open. Should they invest in new capacity to be able to compete more effectively? How exposed a position can they afford to take in their key markets? In short, how does a business cope with the risks inherent in the modern economy?

Statistics are a set of tools that can help business organisations impose order in the modern world. Business statistics offer the opportunity to make decisions on the basis of numerical data, in the face of uncertainty.

In this section you can find out a little more about how businesses might use data to help support these decisions. The materials available are:

• Economic activity - how businesses use data to measure economic activity and the impact of developments in the world economy on their markets
• Market research - how businesses use data as a form of secondary market research to help them analyse the structure of their markets
• Forecasting and trends - how businesses use data to examine economic trends and try to forecast ahead to see how these trends may impact on their business
• Investment appraisal - how businesses approach the crucial decision of making investment, and the role of data and data skills in these decisions
• Data use in business - an overview of the issues businesses face in the use of resources, and a case study of the Renault/Nissan takeover and the role data played in the decisions related to this

Use of statistics in decision making:

Let's try to apply some statistical concepts to some routine business decisions:

• What is your expectation of a good/service that your business needs to consume? Or, what is your customer's expectation of the good/service that business is trying to sell?
  This business decision can be put another way: what is a good estimate of the mean, in terms of price, availability, after-sales service?
  
• Armed with the knowledge of these expectations, how can your business quantify the level of quality offered by the good/service that your business sells?
  In statistical terms, this could be expressed thus: what is a good estimate of the standard deviation within your key market(s)?
  
• How well does your business' goods or services bear comparison with other similar items in the market?
  In other, statistical words, can you compare several means, each representing a different organisation's offer?

Each of these decisions can be viewed through the lens of statistical analysis.

In summary, while business statistics can never replace the decision maker's ability and experience, they offer useful tools that can help managers base decisions on numerical data, in the face of market uncertainty.