Statistical methods play a vital role in major business activities. Commerce and industry in the modern age
require a great deal of planning and forecasting of various kinds. Statistics comes to the aid of the business
planner in many ways.
1. The producer or the manufacturer has to estimate demand for his goods in the immediate as well as distant future. This is done by market research for which all the steps of statistical methods have to be followed. A cost accountant uses statistical tools to help the producer fix the prices of various commodities.
2. Similarly, the trader—wholesaler or retailer—depends heavily on methods of statistical analysis for finding out solutions to problems regarding buying and selling activities. For profitable trade he must know what the customers want and also how long the demand would last. This is very important for international trade. For this purpose statistics of export-import for various commodities and regions are collected and analysed for decision making
3. Statistics is equally important for subsidiaries of trade. The banker plays an important role in commerce
and industry. He provides finances to the producer and trader. There fore, he has to forecast when the demand would be high and accordingly decide what amount of reserves he must have. Similarly, he must estimate what amounts would be required by his depositors, otherwise his bank would fail. For this, detailed analysis of money transactions is required where statistical tools are indispensable.
4. Insurance companies function on the basis of estimations of mortality rates, that is life expectations and on this basis of calculated insurance premiums. Accordingly, they decide what proportion of their capital can be invested and what proportion can be kept ready for payments of matured policies.
5. Other public utility bodies, such as the Road transport Companies, the Railways, Advertising concerns,
Warehouses, etc., which contribute to commerce in a significant way, also make use of statistical data for their efficient functioning. For instance, they have to determine the extent of demand that would be made on their services and the rates they might fix for the same. In fact, no modern organisation can survive and efficiently function without analysis of the complex factors that influence commerce. For systematic business analysis statistical tools are absolutely essential.
Modern business management, therefore, is an activity that requires a great deal of analysis or making
proper decisions in the face of a large number of uncertainties.
Source: Statistics for Economics—M.N. Shah