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Chapter 1 Data and Business Decisions

Basic Concepts Review Questions

1. Explain the importance of statistics in business.

Answer:

Statistics is the science of collecting, organizing, analyzing, interpreting, and presenting data. In business, statistics is quite important because it allows managers to make fact-based decisions instead of “gut feel” type decisions. In addition, if various claims are made about a product or service, the use of statistics can prove or disprove claims which can prevent legal issues and can allow for true and ethical decisions about a hypothesis.

2. Explain the difference between data and information.

Answer:

Data typically refers to the raw data, which is an important ingredient in producing useful information. Information is what managers can use to make appropriate decisions.

3. Describe some ways in which data are used in different business functions.

Answer:

Data is used in many different business functions:

a. Finance and Accounting – the data is the basic element from which a balance sheet is created, and the determination of costs and profits at a company or within a business unit.

b. Marketing – data is used to determine advertising impact, how, when, and where coupons and sales promotions are used by customers, in market research to determine customer satisfaction and where new product interests might lie.

c. Human Resources – data is used to determine employee turnover, attendance, success of orientation programs and the effectiveness of training programs.

d. Strategic planning – data is used to determine which countries a company may want to enter in a market and where to build manufacturing and warehouse facilities.

4. Explain how a company might use internal sources of data, special studies, and external data bases.

Answer:

Internal sources of data is the information that an organization already has within its own company data bases and is routinely collected by the accounting,...