In one of the classes I have attended so far in the Data Analytics course, the faculty taught the topic of Probability. One of the statements he made when he introduced the topic in the class, stood out. I realized from the statement, the importance of the Data Analytics course to aspiring Business managers. It was like an “Aha” moment because I had always wondered why the Data Analytics course was relevant to the MBA program.
The statement he made was, that probability was important to business managers as it helps them with decision making.
In our everyday lives, we make decisions and the decisions we make are usually drawn from some assumptions or options. Business managers are not excluded. They are responsible for making business decisions that would benefit the company and all stakeholders. I learned from the class that business management and administration are all about decision-making and that probability is a very helpful tool for the business manager in making decisions.
I learned that we can either make decisions with certainty or with uncertainty. We make decisions with uncertainty when we do not have all the information we need and we make decisions with certainty when we are aware of all the possible outcomes; we only have to decide on the best course of action to take. Probability helps us a great deal when we have to make decisions with uncertainty – business decisions that are critical to the company we work with.
What is Probability?
I learned from the class that Probability is a quantitative feature in Data Analytics. It is a numerical measure of the likelihood that an event will occur.
We deal with a lot of uncertainty, hence, when we are to make a decision we are not likely to know the outcomes of our decisions. There are two levels to this uncertainty – the first level is that we do not know the outcome of an event while the second level is that we do not know the likelihood of the outcome.
As the faculty taught the concept of Probability, he used the football game to further explain the concept. He said, a football match expects that a winner will emerge at the end of the match, a team will lose the match or there would be a draw between the two teams at the end of the match. If I have to make a decision on the team to either support or place a bet on, these expectations from the football match are known as possible outcomes in Probability. Therefore the possible outcomes of the football match are,
The question then is, what is the probability that the team I plan to support will win, lose or have a draw with the other team? The statistical application of probability helps to answer this question and from the results, I can then make a choice/decision based on the probability.
Probability is used to give a quantitative analysis and representation of information. The measurement of probability is from 0 to 1; 0 states that an event is unlikely to occur and 1 states that an event is almost certain to occur. Between 0 and 1, we have a .5 which states that there is a 50/50 chance of the event’s occurrence.
It is interesting to see how a business manager can make better judgment and sound business decisions through quantitative analysis of information. I am not a fan of statistics but I am happy with the foundation that has been laid for the Data Analytics course. I look forward to more learnings from the course.