HOW QUANTITATIVE METHODS ARE USED IN BUSSINESS 1
How QuantitativeResearch Tools used in Business?
Before the onset of quantitative tools, business managers used todepend on their instincts and experience to make difficult decisions.However, this is not possible, especially considering the vast poolof information that needs to be factored in during decision making.Besides, quantitative methods aid the management in makingprojections for the business to enable it to take necessary steps toprepare for the future. Quantitative methods involve theidentification of the problem and the gathering of relevant data thatguides the process of finding solutions to issues ailing thebusiness(Oakshott,2012). In the modern days, business experts rely onmassive amounts of data as well as several quantitative methods toguide managerial decision in the areas of marketing, production,distribution, and personnel management
There are several quantitative methods that experts in the field ofbusiness rely on to make data-driven decisions. The most commonmethods include factor analysis, data mining, linear programming, andregression analysis. Linear programming is a mathematical methodused to determine how to achieve optimum outcomes using the availableand often inadequate resources(Oakshott, 2012). Examples of optimal results includethe lowest possible operating cost and the highest achievableprofits. On the other hand, inadequate resources may include limitedsupplies and human capital. Experts in different organizations thatdeal with the production of goods and services for profit use linearprogramming to evaluate and develop solutions to problems related todistribution channels, planning, and scheduling.
The other quantitative method available to business professionals isfactor analysis. This is a data reduction and analysis method thatprovide insights on the relationships between certain aspects of abusiness such as customers’ preferences and behavior. This methodis mostly used by researchers to investigate the relationshipsbetween the available information with an aim of pinpointing theunderlying and unmeasured factors that can offer an explanation tothose correlations (Render, et al., 2015). A good example todemonstrate how factor analysis can be used in business includesmarket researchers analyzing the information at their disposalconcerning consumers’ spending habits with the aim of identifyingfactors that may provide an explanation for specific purchasingpatterns. Consequently, market researchers may be able to tell theirclients the reason customers prefer certain products over others.
Data mining allows business professionals to integrate their computerprogramming skills with statistical knowledge. This method isparticularly useful for organizations that deal with large amounts ofdata. The rationale for using this tool is to unravel thecorrelations and patterns hidden within the huge amounts ofdata(Swift &Piff, 2014). For example, companies such as Amazon relyon this method to come up with profiles of client`s buying behaviors.They in turn use this information to suggest certain products tocustomers based on the latter’s past purchases. Also, certainproducts are bought together by different customers, and thisprovides insight to the company that a client interested in one ofthese items may also want to buy the other.
Quantitative methods play a crucial role in the different businessfields. For example, these techniques help in conducting andanalyzing market researches. Marketing is more than just publicrelations, promotion, and advertising. It entails collecting datathat help market researchers to determine the specific traits thatcustomers seek in services and products (Render, et al., 2015). Theyrely on different sources of information to collect data. Aftergathering relevant data, market researchers can utilize any of thequantitative methods that suits their objectives. For example, marketresearchers may gather data from customer surveys to identify certainunique selling points for specific products. Additionally,quantitative methods help in analyzing markets to compare theeffectiveness of the distribution channels used. One can compare thedifferent distribution channels by comparing the sales volume, returnrates, administration cost as well as the selling cost of each one ofthem.
Quantitative methods are pivotal in sales analysis. For manybusinesses, gross sales is the only piece of information that guidesthe decision making process. However, to maximize the profit,business professionals use quantitative methods to evaluate whetherthere is a need for the clients to lower or raise prices, changedistribution channels or spend much time and resources on one of theproducts. For example, while a company’s overall sales margin mayconvey the message that the business is doing well, quantitativemethods may reveal information that points to the contrary. Forexample, quantitative sale analysis may reveal that the company isusing much of its resources on a certain distribution channel thatgenerates low gross profits, margins and sale volumes compared toother available options(Swift & Piff, 2014). Quantitative methods may also yield much information on mattersregarding human resource management. It is usually hard for anorganization to correctly evaluate its overall human resource cost.It is also hard to assess how certain human resource aspects such asworkers’ health and increased absenteeism affect productivityunless quantitative methods are used(Swift & Piff, 2014).
In my opinions, quantitative methods will become part and parcel ofall future decisions, not only in the business field but also in allother areas. As time goes by, the business environment isincreasingly becoming complex as competition stiffens while resourcescontinue getting scarcer. Besides, the information needs of heads oforganizations are becoming complex as well, while the time availablefor decision-makers is getting shorter. This means that everyorganization is seeking to utilize the available resources optimallyto ensure that all stakeholders benefit. Due to the increasedcomplexity and risk of getting out of business, organizations need toavoid being subjective. Besides, making the wrong decisions isincreasingly becoming more severe and costly. Currently, companiesare experiencing more serious scrutiny from shareholders and even thegovernment to ensure that the investors do not lose their money. Assuch, business managers may find themselves in the corridors ofjustice in case their decisions result in huge losses for thebusiness. To avoid being accused of negligence, heads oforganizations should ensure that all their decisions are data-driven.
Oakshott, L.(2012). Essentialquantitative methods: for business, management, and finance.Palgrave Macmillan.
Swift, L., &Piff, S. (2014). Quantitativemethods: for business, management, and finance.Pearson Education Limited
Render, B., Stair, R. M., Hanna, M. E., & Harry, T. (2015).Quantitative Analysis for Management. Global Edition.McGraw Publishers.