CHAPTER 1: INTRODUCTION TO STATISTICS

Definition: Statistics is a scientific procedures & methods for collecting, organizing, summarizing, presenting & analyzing data, obtaining useful information, valid conclusions & making effective decisions based on the analysis. The use of statistics To solve the problems To make effective decisions in administration, marketing, engineering, social science & others. Why a Manager Needs to Know about Statistics To know how to properly present information To know how to draw conclusions about populations based on sample information To know how to improve processes To know how to obtain reliable forecasts

The use of statistics in business Statistics are used by all industries and businesses as a standardized unit of measurement for presenting data in a useful and meaningful format. Statistics can be used to measure historical performance and to forecast future targets. For business managers and leaders, statistics provide insight into how business units are performing relative to an organizations goals and objectives. Statistics also forecast future trends and are used in all areas of human thought an endeavor for planning purposes. Statistics are used in all areas of trade and commerce. Since the advent of the internet, statistics have become important for online business operators. The computer industry makes use of statistics to detect emerging trends and develop products that are in line with consumer preferences. Without data to support product development,

organizations would have no way of determining changing consumer preferences and tastes.

Surveys are often used by companies to get closer to the target market.

Types of statistics

Descriptive statistics data are compiled, organized, summarized & presented in suitable visual forms which are easy to understand & suitable for use. Various tables, graphs, charts & diagrams are used to exhibit the information obtained from the data.

Collect data- e.g. Survey Present data- e.g. Tables and graphs

Characterize data - e.g. Sample mean =

X
n

Inferential statistics make generalizations about a population by analyzing information from the samples. Probability is often used when stating the conclusions.

Estimation - e.g.: Estimate the population mean weight using the sample mean weight Hypothesis testing - e.g.: Test the claim that the population mean weight is 120 pounds

Some common statistical terms

Sample Population

Population is used to designate the complete set of items that are of interest in the research. E.g. A study on the reading habits of secondary school children in Malaysia.

The population consists of all the secondary school children in Malaysia.

Sample is a subset of items that are chosen from the population. The sample may consist of 1000 secondary students randomly selected from 13 states in Malaysia.

Census If the population we wish is small, it is possible for us to measure a variable for every unit in the population. If the study is carried out in this way on the whole population, the end result is a cencus of the population.

Constant One of the fixed values. E.g. Number of days in a week (7 days) Variable the characteristics of the population of interest. E.g. Monthly income, age, gender, level of education & others. Data a measure on variables of interest obtained from a sample. E.g. Researchers may collect data on the amount of money spent by secondary school students on textbooks.

Parameter a summary measure for the entire population.

Types of variables Qualitative or Attributive Measured with non-numerical scale E.g. Are you a Malaysian? The answer is only Yes or No

Quantitative or Numerical Measured on numerical scale E.g. How tall are you? The answer is numerical Divide into 2 categories

1. Discrete Numerical response which arises from a counting

process. E.g. How many children do you have?

2. Continuous Numerical response which arises from a

measuring process. E.g. What is your weight?

Variable
The characteristics of the population of interest. Example: gender respondents age etc.

Quantitave or Numerical Measured on numerical scale Yield numerical response Example: How tall are you? The answer is numerical

Qualitative or Attributive Measured with non-numerical scale Yield categorical response Example: Are you a Malaysian? The answer is only Yes or No

Discrete Numerical response which arises from a counting process Example: How many children do you have?

Continuous Numerical response which arises from a measuring process. Example: How tall are you? What is your weight?

Types of data Primary data Researchers collect primary data from primary sources or from samples. E.g. A researcher interviews the respondents & records their responses. A researcher may go to the supermarket & observe the buying habits of the public during festive seasons. Secondary data Normally published data collected by other parties. E.g. Government agencies such as Bank Negara & other agencies publish their data regularly & provide secondary sources of data to many researchers. In addition, bulletins, journals, newspapers & other publications also provide useful secondary data to researchers. Advantages More accurate & consistent with the objective of the research. Disadvantages It requires more time, manpower & a higher cost to collect.

Primary Data

Able to explain how the data are collected & limitation of their use. It is easy to access from the internet, journals, annual reports & newspaper.

Secondary Data

Lack accuracy because the measurement procedure & the method of data collection are not explained.

Requires less time to collect.

Inexpensive because there is no fieldwork required.

Data may be biased because the original purpose of data collection is not known.

Primary data collection methods

1. Direct observation learn about the customs & habits of people or

communities. This method enables the researcher to record what actually happens & not influenced by what people say or think. E.g. Count the number of vehicles on the road. Advantage: Easy to get the information. Disadvantage: The observer needs to be highly skilled & unbiased.

2. Interview divide into 2 categories:

Face to face interview - An interviewer asks the questions from a questionnaire & records the responses. Telephone interview An interviewer asks questions from prepared questionnaires by phone. Advantages: Serious approach by respondent resulting in accurate information. Good response rate. Completed and immediate. Possible in-depth questions. Interviewer in control and can give help if there is a problem. Can investigate motives and feelings. Can use recording equipment. Characteristics of respondent assessed tone of voice, facial expression, hesitation, etc. Can use props. If one interviewer used, uniformity of approach. Used to pilot other methods. Disadvantages: Need to set up interviews. Time consuming. Geographic limitations. Can be expensive. Normally need a set of questions. Respondent bias tendency to please or impress, create false personal image, or end interview quickly. Embarrassment possible if personal questions. Transcription and analysis can present problems subjectivity.

If many interviewers, training required.

3. Mail (or postal) questionnaire a questionnaire is sent to each

respondent with a stamped addressed envelope attached. The respondents are requested to answer the questions in the questionnaire & return it to researcher within a certain period of time.

4. Questionnaires- are a popular means of collecting data, but are

difficult to design and often require many rewrites before an acceptable questionnaire is produced. Advantages: Can be used as a method in its own right or as a basis for interviewing or a telephone survey. Can be posted, e-mailed or faxed. Can cover a large number of people or organizations. Wide geographic coverage. Relatively cheap. No prior arrangements are needed. Avoids embarrassment on the part of the respondent. Respondent can consider responses. Possible anonymity of respondent. No interviewer bias. Disadvantages: Design problems. Questions have to be relatively simple. Historically low response rate (although inducements may help). Time delay whilst waiting for responses to be returned. Require a return deadline. Several reminders may be required. Assumes no literacy problems. No control over who completes it. Not possible to give assistance if required. Problems with incomplete questionnaires. Replies not spontaneous and independent of each other. Respondent can read all questions beforehand and then decide whether to complete or not. For example, perhaps because it is too long, too complex, uninteresting, or too personal. 5. Internet surveys are easy and numerous. With a possible worldwide population available and programmable elements, the internet survey allows for customization across a broad spectrum. Databases can be automatically converted digitally, avoiding time consuming reentry. On the other hand, internet surveys require technical skill on behalf of the responder and the survey constructor. Depending on the method used to distribute the survey (placement on website, mass

email, etc.), internet surveys may not offer a true representation of general populations. 6. Short messaging service -Mobile data collection and reporting projects are abundant now that mobile use for development is taking off. Unlike bulk messaging and general information services that are targeting the general public as recipients of standardized messaging, mobile data collection tools are often used internally in an organization, customized to fit with existing organizational processes. 7. Case-studies-The term case-study usually refers to a fairly intensive

examination of a single unit such as a person, a small group of people, or a single company. Case-studies involve measuring what is there and how it got there. In this sense, it is historical. It can enable the researcher to explore, unravel and understand problems, issues and relationships. It cannot, however, allow the researcher to generalize, that is, to argue that from one case-study the results, findings or theory developed apply to other similar case-studies. The case looked at may be unique and, therefore not representative of other instances. It is, of course, possible to look at several case-studies to represent certain features of management that we are interested in studying. The case-study approach is often done to make practical improvements. Contributions to general knowledge are incidental. 8. Diaries-A diary is a way of gathering information about the way individuals spend their time on professional activities. They are not about records of engagements or personal journals of thought! Diaries can record either quantitative or qualitative data, and in management research can provide information about work patterns and activities.
Secondary data collection methods Secondary data is data that has already been collected by someone else for a different purpose to yours. For example, this could mean using:

data collected by a hotel on its customers through its guest history system data supplied by a marketing organization annual company reports government statistics.

Sources can be classified as:

paper-based sources books, journals, periodicals, abstracts, indexes, directories, research reports, conference papers, market reports, annual reports, internal records of organizations, newspapers and magazines

electronic sources CD-ROMs, on-line databases, Internet, videos and broadcasts.

The main sources of qualitative and quantitative secondary data include the following: Official or government sources. Unofficial or general business sources. The arrangement is alphabetical by organization with details of titles produced and contacts for further information. It lists references to the following types of sources: trade associations trade and other journals private research publishers stock broking firms large company market reports local authorities professional bodies academic institutions. European Union (Community) sources. International sources. o Organization for Economic Co-operation and Development (OECD) o United Nations and related organizations. Documentation method involving data are already record and available. Make checking for data are those found from questionnaire, interview and others. Two resources: a) b) Internal own organization External organization out of the body, government & private.

What is sampling? Sampling is the process of selecting a sample from a population. Sampling techniques are scientific methods of selecting samples from populations. Types of sampling techniques 1. Probability sampling techniques Subjects of the sample are chosen based on known probabilities a) Simple random sampling Each item has the same chance to be selected as a sample.

The sample is drawn randomly by random number table or lottery.

b) Systematic sampling Divide the population size (N) by the sample size (n) to obtain the range k (k=N/n) An element is randomly selected from the first k elements in the list. c) Stratified sampling Divide the population into several mutually exclusive strata & randomly sample from each of these strata.

Elements within each stratum should be homogenous, whereas the differences between strata should be heterogeneous.

d) Cluster sampling The target population is first divided into subpopulations or clusters.

10

A random sample of clusters is selected based on a probability sampling technique such as simple random sampling.

2. Non-probability sampling techniques a) Convenience sampling

Recommend for pre-testing of questionnaires, the gathering of ideas & insights or the forming of hypotheses.

b) Judgemental sampling

The population elements are selected based on the judgement of the researcher. The researcher selects a respondent whom he feels possesses certain characteristics that represents the population of interest based on his experience.

c) Snowball sampling An initial group of respondents is selected, usually at random. After being interviewed, these respondents are asked to identify others who belong to the target population of interest. This procedure is applied until the researcher obtains the required number of respondents. d) Quota sampling

The researcher observes the specific characteristics of potential respondents before making a selection. The procedure is similar to convenience sampling except that the number (size) allocated for each group of respondents with specific characteristics are based on population statistics.

11

12