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What Are Quantitative Business Methods?

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  • Written By: C. Mitchell
  • Edited By: John Allen
  • Last Modified Date: 23 September 2016
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Quantitative business methods are processes and algorithms used to help corporate managers and executives make decisions and predict outcomes. They are purely numbers-driven. Quantitative business methods do not account for individual employee capabilities or any soft calculations that vary based on departmental performance or personnel. Rather, they are founded on the belief that hard-line statistics and economic theories are the best predictors of business success.

One of the main goals of quantitative business methods is to find a way to make corporations more efficient using principles of economics and mathematical strategy. It is a way of giving numeric value to human output and determining the best calculation to reach a desired answer. The methods are usually optimized and tweaked depending on a company’s size and industry, but generally involve information gathering, data interpretation, and translation of numeric patterns into workplace strategies.

Managers must engage in a lot of numbers-gathering in order to properly apply quantitative business methods to their company or department. A lot of the relevant numbers come from business surveys and questionnaires collected across business sectors. Results must be assigned a numeric value, weighted against each other, and given some sort of analytical value.

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One of the key parts of many companies’ quantitative methods involves a process known as “quantitative feedback theory.” This theory is an economic concept that tries to conceptualize the trade-offs needed to reach a specific result. It uses known patterns from the past to project likely outcomes well into the future using experimental measurements and a “loop” feedback model.

There is little that is simple about quantitative business methods. When done properly, all of the required statistical analysis and reporting survey data can lead to great business developments. Getting there often takes a lot of effort, however.

The overall complexity and time required to properly implement quantitative business methods is one of the main reasons managers either neglect the models or use them inconsistently. Many argue that the time spent analyzing questionnaires and drawing up calculations to discern management strategies could be better spent actually doing that managing more qualitatively. It is often difficult for managers to see the payoff, as well, which also hampers implementation efforts.

In practice, economists and business analysts spend more time studying quantitative business methods than do full-time managers or acting business executives. Businesses that are interested in finding more efficient ways of conducting sales, organizing people, or streamlining processes often choose to hire an outside expert rather than requiring the work from their own employees. Companies can implement the methods, then, without actually having to discover them independently.

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