Scope of Statistics
There is hardly any walk of life, which has not been affected by statistics. It has become one of the indispensable parts in almost areas. It is used in Business, management, accounting, finance, marketing, production, economics, computer, information technology, physical sciences, social sciences and many other areas. Attempts have been made to discuss some of the uses of Statistics in business and economics in the following sections.
Statistics, Computer, and Information Technology
The availability of computers has resolved the problem of data storage as well as the problem of data processing (or process of converting data into meaningful information). The availability of internet facilities or other electronic mailing devices has eased the communication of data or information. Computer alone is not sufficient to resolve all the problems related to data. As for example, computer cannot resolve the problems that arise during the time of data collection, data analysis and interpretation of information.
They still remain and continue to remain at the domain of statisticians. It is, therefore, our knowledge and understanding of the basic principles and methods of statistics, and our ability to use computer play very crucial roles in broadening the scope of information technology.
The inter-linkage between Statistics, Computer and Information Technology within the framework of data problems of data problems can be explained through the following chart:
Statistics and Accounting
Public accounting firms use statistical sampling procedures when conducting audits for their clients. Just for example, 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 or not. Generally, the number of individual accounts receivable is so large that it could be very time consuming to check its validity. The common practice for such situations is to take a sample of the accounts. After checking the sampled accounts, the auditors make conclusions as to whether the accounts receivable amount shown on the client’s balance is acceptable or not.
Statistics and Finance
The persons, involving in financial analysis, have been using variety of statistical information and methods to guide their investment recommendations. For an instance, by comparing the information for an individual stock with information about the stock market averages, financial experts can draw conclusion as to whether an individual stock is over or undervalued. Statistical measures such as coefficient of variations, regression analysis etc. have been using in the study of financial performances of financial institutions and companies.
Statistics and Economics
Statistics has been widely used in economics. Economists use a variety of statistical information and methods in making forecasting, planning and formulations of economic policies, price index numbers, unemployment rates, manufacturing capacity utilization, human development indicator indices, and quality control charts etc.
Statistics, Business and Management Sciences
Business executives are relying more on statistical techniques for studying the needs and the desires of the consumers and for many other aspects. The success of a business firms or businessman depends on the accuracy and precision of the statistical forecasting, proper analysis of the situation and proper management of the business firm. There are generally, three levels of a typical organization. They are namely -Strategic, Managerial, and operational. Statistics plays very important role at all three levels.
In strategic level, the focus should be given in the statistical thinking which may involve the major components such as notion of a process, notion of measurement and data based decisions, understanding and dealing with variation, statistical tools, and systematic approach. The notation of process is the one which is very fundamental in any organizational change. In every action, there may involve input and output components, which needs to be realized. Decisions at the strategic level should be based on facts supported by appropriate data.
Managerial level in which systems are made to implement according to the directions of the upper management. Middle level management is generally responsible for the best product, process design, process control, process improvement, training etc. In this level also, the prerequisites for system designer is good understanding of appropriate statistical tool and statistical thinking.
The systems built in the managerial level are implemented in operational level. It is essential to have good understanding of statistical tools for those who are working in the different capacity of the operational level.
Another important component in business is the implementation of the program. For the effective implementation of the organizational program, the number of components needs to be taken care of. Among many of them, generally the issues such as commitment of top level management, role of statisticians, planning for implementation etc. play very important role.
Management Science is concerned with developing and applying models and concepts that help to illuminate management issues and solve managerial problems through the proper managerial analysis and financial analysis. The formulation of such models requires massive use of mathematics and statistics.
In financial analysis as well, there is involvement of variety of statistical information and methods to guide investment recommendations. Statistical measures such as coefficient of variations, regression analysis etc. have been used in the study of financial performances of financial institutions and companies.