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BUSINESS STATISTICS

Submitted by
K GOVIND BHASKER – 17010324094
Division – D; Batch – 2017 - 22

Symbiosis Law School, Hyderabad


Symbiosis International University, Pune

In
September, 2019
Under the guidance of
Dr.Rajnikanth

Symbiosis Law School, Hyderabad


Symbiosis International University, Pune
INTRODUCTION
Entrepreneurship is one of highest career choices pursued by millennials and is the only
viable choice for people who like to be their own bosses or to create change in the form of
better workspaces and better corporate culture ingrained with millennial ideals.

The definition of the word entrepreneur introduces a person who sets up a business or
businesses with one of the main objectives being, making money and in the process of doing
so being confident enough to take on new risks. Entrepreneurship is a relatively new concept
in India. It is one of the most important forms of business which exists, which are essential to
build an industry. Among the other factors of production, i.e. capital, labour, land and
entrepreneurs, the fourth one is the most important as it is essential for the other factors to be
utilised.

In India it has not caught on at the same pace that it has flourished in, in other countries. The
reasons for this can be classified into two categories. The entrepreneur’s inherent qualities
and the external conditions of the environment in which he/she is seeking to establish a
business are the two categories.

An entrepreneur’s inherent qualities synonymously can be called an entrepreneur’s


capabilities. The term “entrepreneurial capabilities” is also called, entrepreneurial cognition,
entrepreneurial innovation, entrepreneurial creativity and organisational capability.
Entrepreneurial capabilities can be defined as an exclusive set of skills which can be both
individual skills and also organisational capabilities. The definition is not just restricted to
that but also includes certain skills and also actions, practices and certain routines. The aim of
all the necessary skills, actions, practices and routines is that the entrepreneur would be able
to explore, adapt and exploit the untapped business opportunities in whichever field the
entrepreneur seeks to establish themselves. For an entrepreneur to be successful, the most
important qualities are perseverance and attitude open for feedback.

The notion of entrepreneurial capability is to capture a business’s capacity to sense, handpick


and mould opportunities, and harmonise their strategic moves and resources in quest of these
opportunities. Though there has been no firm agreement or conclusion formed about what
exactly entrepreneurial capability can be defined as, according to most people it also includes
the firm’s capacity, to identify and embrace and change opportunities and then move one to
synchronise all moves made strategically according to whatever plans made. The central role
played by the entrepreneur in determining how well the firm performs.

PERCEIVED CAPABILITIES

The perceived capabilities of the entrepreneur basically mean the skills of the entrepreneur
and whatever resources he, himself can bring into the firm or business as the case may be.
The resources may be in any form and they are relevant as long as they help the firm in
establishing itself and further growing or achieving its objectives. The entrepreneur’s skills
include his own qualities for example his problem solving capability, his ability to lead and
his ability to make sure that there is smooth flow of work in a team etc…

PERCEIVED OPPORTUNITIES

Perceived opportunities include whatever untapped aspects of business remain which also
contain a significant amount of potential. They can also be defined as perceived certain
situation which are available which would result in an increase in the inward movement of
raw material and other resources and the outward movement of goods and services. Other
opportunities also include, the opening up of opportunities in existing markets and the
opening up of new markets.
LITERATURE REVIEW OF THE TOPICS CHOSEN
In the assessment of the given data and in its interpretation the following sources were used

1. Business Statistics by S. Chand.


2. Encyclopedia of creativity, invention, innovation and entrepreneurship – Sharam
Alijanni.
3. A Lifespan Perspective on Entrepreneurship: Perceived Opportunities and Skills
Explain the Negative Association between Age and Entrepreneurial Activity –
Frontiers in Psychology.

The above sources were used to understand different terms and their concepts. The sources
were also further used to understand and then to calculate the result from the given data. The
different concept of the terms involved, their characteristics and nature and then
interpretation was done accordingly.

To address the question as to how calculations were done, the technique and the procedure
were learnt and put to use from the statistics textbook, by S.Chand.

RESEARCH METHODOLOGY

The research methodology utilised in this assignment was mainly doctrinal. Empirical
research has not been done as there was no field work involved. The data has been given by
the professor and using certain research papers i.e. the ones mentioned above the different
terms and their respective concepts, have been understood from books and research papers
and after the data has been calculated the result has been interpreted and concluded based
again on the understanding from the above mentioned sources.
CORRELATION, REGRESSION EQUATION AND STANDARD
ERROR CALCULATION

PC(X) PO (Y)
50 56

47 46

19 56

38 43

12 7

35 60

37 39

35 28

53 51

28 27

∑=354 ∑=413

The average or mean of x is 35.4 ( 354 ÷ 10)

The average or mean of y is 41.3 (413 ÷ 10)


KARL PEARSON’S CORRELATION COEFFICIENT

PC(X) PO(Y) ̅ (x)


X-𝑿 Y-𝑿̅ (y) x*y x2 y2
50 56 14.6 14.7 214.62 213.16 216.09
47 46 11.6 4.7 54.52 134.56 22.09
19 56 -16.4 14.7 -241.08 268.96 216.09
38 43 2.6 1.7 4.42 6.76 2.89
12 7 -23.4 -34.3 802.62 547.56 1176.49
35 60 -0.4 18.7 -7.48 0.16 349.69
37 39 1.6 -2.3 -3.68 2.56 5.29
35 28 -0.4 -13.3 5.32 0.16 176.89
53 51 17.6 9.7 170.72 309.76 94.09
28 27 -7.4 -14.3 105.82 54.76 204.49
354 413 =1105.8 1538.4 2464.1
35.4 41.3

∑𝑿𝑿
𝑿=
√∑𝑿𝑿 ∑𝑿𝑿

𝑿𝑿𝑿𝑿
r=
𝑿𝑿.𝑿𝑿∗𝑿𝑿.𝑿𝑿

r = 0.5676

SCATTERED DIAGRAM
70

60

50

40

30

20

10

0
0 10 20 30 40 50 60
REGRESSION

PERCEIVED PERCEIVED X*Y X2


CAPABILITIES (X) OPPORTUNITIES (Y)
50 56 2800 2500
47 46 2162 2209
19 56 1064 361
38 43 1634 1444
12 7 84 144
35 60 2100 1225
37 39 1443 1369
35 28 980 1225
53 51 2703 2809
28 27 756 784
∑x=354 ∑y= 413 ∑xy =15726 ∑x2=14070
35.4 41.3

Ʃ𝑿𝑿 − 𝑿𝑿̅𝑿̅
𝑿=
Ʃ𝑿 2 − 𝑿𝑿̅2

15726 − (10 ∗ 35.4 ∗ 41.3)


𝑿=
14070 − (10 ∗ 1253.16)

𝑿 = 1105.8 ÷1538.4
b= 0.71879

𝑿 = 𝑿̅− 𝑿𝑿̅
𝑿 = 41.3 − (0.71879 ∗ 35.4)

𝑿 =15.85452418

𝑿 = 𝑿 + 𝑿𝑿
𝑿 =15.85452418 + 0.71879x
STANDARD ERROR

perceived perceived X*Y X2 𝑿 Y-𝑿


capabilities opportunities (Y-𝑿)2
50 2800 2500 51.79446178 4.205538222
56 17.68655173
47 46 2162 2209 49.63806552 -3.638065523 13.23552075
19 56 1064 361 29.51170047 26.48829953 701.6300121
38 43 1634 1444 43.16887676 -0.168876755 0.028519358
12 7 84 144 24.4801092 -17.4801092 305.5542178
35 60 2100 1225 41.0124805 18.9875195 360.5258968
37 39 1443 1369 42.450078 -3.450078003 11.90303823
35 28 980 1225 41.0124805 -13.0124805 169.3246487
53 51 2703 2809 53.95085803 -2.950858034 8.707563139
28 27 756 784 35.98088924 -8.980889236 80.65637146
∑=354 ∑=413 ∑=15726 14070 ∑=1669.25234
35.4 41.3 1462.02

𝑿
Ʃ(𝑿 − 𝑿^)
𝑿𝑿𝑿 = √
𝑿−𝑿

𝑿𝑿𝑿𝑿. 𝑿𝑿𝑿𝑿𝑿
𝑿𝑿𝑿 = √
𝑿𝑿 − 𝑿

𝑿𝑿𝑿 =14.44494868
INTERPRETATION OF CALCULATIONS

 Through the medium of statistical tools the raw data has been utilised to find a
relationship between perceived capabilities and perceived opportunities. The values of
Correlation is0.5676 ; Regression equation is 𝑿 = 15.85452418 + 0.71879x and the
estimate of Standard Error is 14.44494868.
 These values will help us analyse the depth of the relationship and dependency of the
two variables on each other. As we have assumed that there is a positive relationship
between the two variables, this interpretation will help us understand if the
assumption is true or false.

CORRELATION

Correlation can be positive or negative. Positive Correlation shows that as one variable
increases or decreases the other variable also increases or decreases. E.g. If r = 1, it
means the relation between the two variables is such that if ‘X’ increases or decreases ‘Y’
will also increase or decrease. E.g. speed and wind are positively correlated

 There are two important aspects to interpret a correlation coefficient, strength and
direction.
 Strength refers to the absolute value of the correlation whereas direction refers to the
sign of the coefficient i.e., positive or negative.
 In this particular instance the correlation is positive value which indicates that there is
a direct relationship between perceived capabilities and perceived opportunities. If
perceived capabilities increase perceived opportunities will also increase.
 But if the value of correlation is to be seen, as such there is no perfect relationship
between the two variables. But because this value is positive which refers to the
direction of the coefficient one thing that can be ascertained is that if ‘X’ increases
there will be an increase in ‘Y’.
REGRESSION EQUATION AND ESTIMATE OF STANDARD ERROR

 The regression equation so obtained establishes a relationship between the two


variables and establishes an interdependence.
 If the ‘Y’ variable so obtained by using the value of ‘X’ is negative then there is a
negative relationship between the variables.
 The ‘Y’ variable directly does not depend upon ‘X’ as a whole. It is also influenced
by ‘a’ which is the intercept and ‘b’ which is the slope of ‘X’. These two are assumed
to be constants.
 In this particular instance as we have obtained a and b through the formula
mentioned, if ‘X’ increases ‘Y’ will also increase. But if the intercept i.e., a is
negative then the value of ‘Y’ would have decreased even if ‘X’ increased, the same
would have happened in the case if b was negative.
 We cannot totally depend upon the regression equation because, in our case the
estimated error has a very big value. This is because the standard error is the square
root of the average of squared deviation. It shows how accurate is the regression
equation so obtained. Larger this value greater is the inaccuracy and vice versa.
 In this particular instance also the value of standard error is very high i.e.,
14.44494868 due to which the inaccuracy will increase.
 Therefore, there is a positive relationship between ‘X’ and ‘Y’ but because the error is so
high the value or strength of ‘Y’. Hence, it can be positively established that there is a
positive relationship between the variables as established by the statistical tools of
Correlation and regression but the strength and depth of that relationship cannot be
determined due to high standard error.
CONCLUSION
In conclusion of this report it is established that the relation between both the variables ‘X’
and ‘Y’ is positive. The assumption made at the start of this report that there is a relation
between the two variables can be answered in affirmative. It can thus be inferred from this
that if the perceived capabilities increase or decrease the perceived capabilities will also
increase or decrease.

But the relationship shared by the two variables is not strong because of the magnitude of the
strength of the correlational value and the large estimated error.

It can be concluded that if perceived capabilities of an entrepreneur increase, it helps the


entrepreneur to identify opportunities better hence resulting in an increase in perceived
opportunities.

Practically speaking it is observed that this is not the only factor that affects the perceived
capabilities but because our report consisted of only 2 variables it is assumed that ‘Y’ affects
‘X’ directly. This relationship between the two variables can also change with time period, if
there are any changes brought in the manner of operation of businesses and also the working
environment owing to societal factors.

These statistical tools are used to determine the relationship between two variables which is
further used to establish or break a pattern. In this particular instance if the perceived
capabilities decrease the perceived opportunities will also decrease, this strategy can be used
during formation of policies and strategic plans.

Hence it can be concluded based on the above calculations and interpretations that if
perceived capabilities increase then perceived opportunities will increase.
REFERENCES
1. Statistics textbook by S. Chand
2. The following research papers were used: -
 Encyclopedia of creativity, invention, innovation and entrepreneurship.
 A Lifespan Perspective on Entrepreneurship: Perceived Opportunities and
Skills Explain the Negative Association between Age and Entrepreneurial
Activity