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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.

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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

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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. Mean: It is called as average value. This average value is used to identify the nature

of data and to estimate the value of data. Ex :Performance of employees in a year

of a company.

B. Mode: 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 3

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 method .These belongs to the 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 to-

1.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 number 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 sample test.

Large Sample Test:- The sample size is denoted by ‘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 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.

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 chi-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 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.

Kothari, C. R. Research Methodology: Methods and Techniques. (2nd

Ed.), New Delhi: New Age

International Limited, 2004.