statistics & business: mapping the relationship

Business, in general, is everybody's business. When we define business informally, it could be any activity with a purpose. Studying, teaching, playing, eating, and other things that we do have a purpose, hence, they are businesses. All of us have businesses to do. However, business can refer to the business for-profit or non-profit. This kind of purposeful activity intends to earn money or receive donations from donors. One book defines business as "an entity designed to consistently deliver a specific type of result to a specific type of consumer, and to continuously improve itself over time." If we dissect this definition we will come up with a meaningful and encompassing interpretation. A business is an entity because it is distinct and separate from its owners. The business has its own personality that it can negotiate or transact itself with other persons or businesses. It is designed to "consistently" deliver a specific type of result -- products. Products can be intangible or tangible. If the business offers a particular service it must do good in offering such service. Before the business considers diversification, it must master its core products. Products of a business must be delivered to specific consumer. In marketing, we call this target marketing. A highly specified target market is a market niche. A business to succeed finds its niche in the market. So as to survive, a business should "continuously" improve itself. We can learn from the illustration of the "boiled frog." If you put a frog in a boiling water, it jumps out quickly from the water. But try to put the frog in a cold water and gradually raise the temperature, it obliviously feel the rising temperature until the frog is boiled. The same is true to a business. A business becomes a "boiled frog" if it becomes insensitive to the changes in the environment. As one saying goes "if you are not growing, you are dying." Businesses should find ways to innovate and create value on their products. These innovations will be coming from the changes in the business environment.

"if you are not growing, you are dying."

With this brief description of a business, needless to say, its management is not easy. There are many things that need to be done to keep the business working on its vision, mission, and goals. These activities from acquiring raw materials to hiring or firing employees require simple to complex decisions. Decision making process has been a vital component of business. It is the process of selecting a course of action, and the selected course of action is called the decision.
Managers are decision-makers. They do a lot of decisions to sustain the operations of the business. How can they be helped to fulfill this role? By means of qualitative and quantitative approaches to decision-making. Managers, in one hand, can rely on their gut feeling, intuition, and biases. On another hand, they might rely on their rationality, logic, and mathematics. Or they might utilize both sides of the brain to make important business decisions. There are decisions that can be solved qualitatively or quantitatively.
When the decision-making process is supported by numerical data manipulation, it is a quantitative approach. Statistics is a quantitative field of study. When we apply statistics to business we call it business statistics. Statistics is one of the various quantitative tools that can help decision-makers do their tasks.