Quantitative Methods for Business Essay

Quantitative techniques are mathematical and reproducible. Regression analysis is an example of one such technique. Statistical analysis is also an example of a quantitative technique. Quantitative techniques are applied for business analysis to optimize decision making IE profit maximization and cost minimization. It covers linear programming models and other special algorithms, inventory and production models. Albert Humphrey, a management consultant who specialized in organizational management, devised the SWOT analysis technique at Stanford Research Institute in the 1960s. Today, not only large corporations but also nonprofit and government agencies employ SWOT analysis. An enhanced method, known as the Six Forces Model, further helps to quantify competition, buyers and suppliers. Identify strengths and weaknesses to assess whether the desired end state is possible. If it is not, revise your objective to reflect an attainable goal. Use SWOT analysis in strategic planning, crisis management and feasibility studies. Apply SWOT analysis techniques in academic environments for developmental studies. Use SWOT analysis to figure out how to exploit each strong point and minimize each disadvantage. SWOT analysis techniques facilitate decision making by classifying and categorizing factors that influence the outcome of activities. Identifying the strengths or weaknesses of your product, price, place of sale and promotion strategy in concert with listing economic, technological and legal factors help you identify your competitive position. Quantitative data help you to justify how important each activity is to your company (http://rapidbi. wordpress. com/2008/12/29/history-of-the-swot-analysis/). SWOT analysis is typically identified as one of two types: planning or marketing. Corporate planning involves setting objectives, assessing abilities, analyzing current strategies, developing new strategies or preparing for different scenarios that might require intervention. This type of SWOT analysis is typically conducted by project-management teams. Marketing analysis, on the hand, involves conducting research to gather opinions, for example, through surveys. These are usually completed by customers or potential clients. The quantifiable results can reveal trends or validate hypotheses you have about how to market your product. Form a cross-functional team to conduct your planning SWOT analysis. Diverse viewpoints produce the best results and prevent closed thinking. Resist the temptation to abandon your objectives as unattainable without close scrutiny. Think creatively to use the data your analysis produces. Match strengths to opportunities when conducting a marketing SWOT analysis. Find innovative ways to convert threats and weaknesses into strengths. Use SWOT analysis to find new markets while avoiding markets for which your company is ill-suited (http://www. ehow. com/about_54926434_sstrength-weakness-quantitative-technique. html). The use of quantitative and qualitative methods in evaluating and planning business related functions is paramount to business success. Good ideas and hard work are often irreplaceable, but proper application of pertinent analytical techniques can help assure that your company is successful by any measure. Both quantitative and qualitative tools are available to even the smallest of businesses, ranging from straightforward techniques such as break-even analysis and SWOT analysis. Quantitative research refers to the systematic empirical investigation of social phenomena via statistical, mathematical or computational techniques. The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to phenomena. The process of measurement is central to quantitative research because it provides the fundamental connection between empirical observation and mathematical expression of quantitative relationships. Quantitative Approach provides us the mathematical & statistical, tools & techniques to optimize the managerial decision making in the areas of planning and control. Such as budgeting, scheduling, quality control etc. Quantitative Courses help you get a job. Because usually you start at lower levels of management, where there aren’t many strategic decisions you make. Your intuition is not trusted upon and you must back your decisions with numbers (cook them up if you can’t find them. That’s what my internship experience says, but do not quote me on that). So, they want quantitative skills in you. However, as discussed widely across the world, obsession with quantitative stuff can be disastrous. They are only tools and do not substitute managerial judgment. And as you rise in the hierarchy, you intuition and qualitative judgment start getting valued. Qualitative skills are not just a good-to-have asset then, but absolute requirement. Because for taking higher level decisions, you may not always have the kind of precise framework you have for lower level jobs. But most important thing about quantitative courses, while you are a student, is that they can be learnt. Learnt irrespective of several things going wrong like having an incompetent instructor! Even if you do not have much aptitude, by working hard you can extract something from these courses. Qualitative courses on the other hand pose several problems in learning. Irrespective of the presence of several much touted pedagogical tools and techniques, they depend heavily on the quality of the instructor, aptitude of the student and the chemistry between the two. An inarticulate instructor may still manage to teach you a quantitative course, but for a qualitative one it is disastrous. Well, one big problem with qualitative courses is that by the time you shall be allowed to use them in an organization, you would have forgotten them all. Many students wonder if they’ll ever really need to know how to use the quadratic equation or find the volume of a cone. Not realizing how useful math can be, some choose to only fulfill the minimum requirements that their high schools requires. Those at College Board also emphasize how math can help you prepare for a career. The skills that you learn in math courses may be applicable down the line, even if you are not studying to become an engineer or an accountant. Many entry-level jobs require employees to have some math knowledge. Even understanding the basic math functions can be advantageous. Mathematical courses can prove powerful support for business decisions. In their later business careers, this will motivate them to consult with mathematicians and employ effective quantitative methods. Mathematics provides many important tools for economics and other business fields. The recognition of its importance by many students each year will certainly strengthen the position of mathematics in our society. Why do business consultants and directors need to know math? Business is all about selling a product or service to make money. All transactions within a business have to be recorded in the Company accounts and quite often involve very large sums of money. http://johnsonsr. spps. org/Why_is_math_important. html). So for example, you need to be able to estimate the effect of changing numbers in the accounts when trying to work out your expected performance for next year. Also businesses rely heavily on using percentages, in particular anyone who works as a sales person will need to be quick at mental arithmetic, approximation and in working out percentages, The more percentage discount you give a customer when you sell them a product, the less profit your company will make, so it really does pay to know your math (Brechner). One area where quantitative techniques are applied in business is in the area of finances. Some of the models that financial managers and analysts use are return on investment, decision trees and net present value. Financial analysts determine how much profit a particular product brings in versus the costs of producing that product. They run regressions and analyses to note trends over time and determine how much to invest in a particular business line. Financial analysts also use quantitative methods to determine productivity and whether or not to hire, retain or lay off workers. They use quantitative data to manage risk and create investment vehicles. Advertisers use quantitative data to determine how many viewers or readers will see a particular advertisement in a particular medium. They use data from rating services to find out how many people click on a certain website or watch a particular television show at any time. Advertisers also use quantitative data to do pre- and post-testing of advertisements. Advertisers use surveys to test ad recall in viewers, and ttitudes about proposed advertisements, among other things. Companies make heavy use of statistics to determine how to market their products, which markets their products and services will do best in and which consumers will buy their products. There are thousands of companies in the United States that gather and analyze data about consumer interests, desires, likes, dislikes, motivations and concerns. Marketers use this data to focus sponsorships, direct mail campaigns and position their companies in the general culture. Marketers also use data from UPC codes at stores (often in combination with shopper discount cards) to determine who is buying their products, how often and where. This also gives them important information to use in making decisions about stocking, delivery and promotions. Insurance companies have a multitude of applications for quantitative data. Although many of these applications could transfer to other businesses, insurance companies have dozens of statisticians or actuaries on staff. Therefore, they have the manpower and know-how to analyze mountains of data. For example, insurance companies gather data about each salesperson in each line of business. They then analyze the data to see if there are similarities in the top salespeople so they can recommend improvements to those not doing so well. They also see which lines of business produce profit and which should be closed down because they are unprofitable. Insurance company actuaries also analyze data on accidents, fires, floods and other mishaps that require them to pay out money and use these analyses to set insurance rates for their customers.