Decision making is the process where owners and managers review information relating to new opportunities. This function relies on different approaches for evaluating information. Using probability concepts is a statistical approach for making decisions.
Business statistics apply mathematical formulas or models to business information in an attempt to determine the probability of success relating to an opportunity. This information can be internal or external, depending on the decision at hand. Accountants or financial analysts may play a role in analyzing this information.
Probability concepts typically include an objective, statistical model, observations or constraints, analysis and a conclusion. This process represents a quantitative approach to making business decisions. Removing the personal judgment or inference of owners and managers can help companies make better and more reliable decisions.
Benchmarking is a process where companies can compare their information to the industry standard or a competitor. Probability concepts can help business owners and managers develop a process where they can measure their performance rather than just make decisions.