Business Statistics

Business statistics is the science of good decision making using often insufficient and uncertain information. It is a branch of applied statistics and is used in many disciplines such as financial analysis (of corporates), econometrics, and Business Intelligence.

Sound business decisions must be based on facts and not on personal or emotional opinions. So Business Statistics deals with the analysis of data collected from the business (or government) operations to make meaningful decisions.

The data could either be collected as a by-product of carrying out the normal business operations (or running the governments), or collected using a carefully designed sampling strategy.

Business managers are often faced with two important issues: The size of the sample; and the method of sampling. Follow this link to learn more about these two issues.

Data collected during the normal course of operations will be in the form of a time-series. That is, a particular variable observed over a period of time. For example, daily branch sales of a supermarket at a particular location over a period of three months. This makes the topic of time series analysis especially important in business statistics.

A business statistics course is quite useful for students studying for Business Administration qualifications. The course usually covers topics in statistics such as descriptive statistics , probability theory, probability distributions, hypothesis testing , confidence intervals, linear regression, and correlation.

Linear regression deserves a special mention as it plays an important role in decision making. It is a powerful technique for studying relationship between one dependent variable (i.e., output - performance measure) and one or more independent variables (i.e., inputs - decision variables).

Summarizing relationships among the variables by the most appropriate equation allows us to predict or identify the most influential decision variables and study their impacts on the output for any changes in their current values.

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