Unlock Key Concepts in Mathematics for Business Administration: What You Need to Know
Table of Contents
- jaro education
- 1, December 2024
- 4:00 pm
When it comes to mathematics, Indians are unbeatable. From Aryabhatta to Shakuntala Devi – from time to time, India has given birth to various mathematical juggernauts. No matter what you do, you will include mathematical concepts. Mathematics for business is no different. Business and mathematics share an inseparable bond because from calculating profits to distributing salaries and bonuses – it is everywhere.Â
In this blog, we will explore 10 crucial concepts of mathematics for business that everyone must know before they switch to corporate mode. As a student, it might be a bit daunting to do math, but by the time you finish this blog, you will realize that business and mathematics are interrelated and almost every concept taught at schools has a direct or indirect impact on businesses.
What is The Relation Between Business and Mathematics?
Mathematics for business is used to understand how a company generates money, and with that money, how they manage expenses. It involves profits, discounting, keeping track of finances, budgeting, cost controlling, and the likewise.Â
Business and mathematics have a relation in the following business scenarios –
- In financial calculationsÂ
- In modelingÂ
- In statistics
- In marketing
- In risk management
*geeksforgeeks.org
In Financial Calculations
Calculations create the base of any business. It is very important to analyze the costs associated with production. During the production process, many things need to be included, like the cost of raw materials, plant and machinery, rent, wages, marketing, and various other things. Mathematics for business ensures that every big and small element is taken into consideration when calculating the cost, price, and profit of products.
In Modeling
A lot of math and analysis is needed to analyze the market and find underlying opportunities. For example, an eCommerce platform analyzes sales data over the past years and finds out if there is an increase or decrease in demand over time. Business and mathematics are related not only to calculating profits and losses but also to forecasting trends and making predictions.
In Statistics
With math, professionals create charts and graphs to represent historical data in an organized format visually. Mathematics for business is used during meetings to discuss the growth or possible changes in the strategy with the help of graphs and charts.Â
In Marketing
Marketers use mathematics to establish a successful marketing strategy. Mathematical formulas calculate cost per acquisition, cost per lead, return on ad spend, and other metrics.
In Risk Management
Mathematics for business can also be used to check financial risks and future changes in a company. There is software available that helps companies determine various risks in the business.Â
10 Concepts of Mathematics for Business That Every Professional Should Know
If you want to know the relationship between business and mathematics then you should talk to someone who is working in a company. You will realize that mathematics for business isn’t just limited to the above 4 situations, it has a massive scope.Â
Here are 10 concepts of mathematics for business that you should know if you want to pursue your career as a corporate professional –Â
- Financial mathematics.Â
- Mathematics for statistical analysis.Â
- The concept of linear algebra.Â
- Calculus in business administration.Â
- Decision theory.
- Game theory for strategic decision-making.Â
- Permutation and combination.Â
- Compound interest.Â
- Ratios and proportions.Â
- Quadratic equation.Â
- Correlation and regression.
1. Financial Mathematics
Every business faces financial problems, and to solve those problems there are mathematical solutions. Financial mathematics is applying mathematical principles to financial scenarios. Financial mathematics for business enables corporations to make appropriate investment decisions, risk management, and financial planning decisions. This discipline combines business, mathematics, and statistics along with probability with a blend of economic theories.
2. Mathematics For Statistical Analysis
Business, mathematics, and statistics share an inseparable bond. While mathematics for business involves quantity, structure, space, formulas, and mathematical proofs that support conclusions. On the other hand, statistics is used to test hypotheses. It is used to figure out the likeability of new products, and trends over time, and likewise through mean, median, and mode.
3. Concept Of Linear Algebra
Linear algebra deals with vectors, vector spaces, linear transformations, and systems of linear equations. This concept of mathematics for business helps corporations understand and solve problems involving multiple variables and equations. Marketers and analysts use linear algebra during market segmentation, revenue forecasting, supply chain management, and resource allocation.Â
*medium
4. Calculus in Business Administration
Business calculus helps companies optimize functions and understand change rates. This brand of mathematics for business provides a framework to analyze and maximize business metrics like profits, cost control, production efficiency, and revenue growth. Mathematics and statistics for businesses are not only good for operational efficiency, but such concepts help key stakeholders know which way the business is flowing so that they can make changes at the ground level.Â
5. Decision Theory
Put simply, this concept of mathematics for business helps in figuring out a person’s choices, and the logic behind the choices. Decision theory can further be divided into normative decision theory and optimal decision theory. This theory is a perfect example where mathematics and business when combined can reveal and predict consumer behavior. It provides a systematic approach for evaluating alternatives, assessing risks, and maximizing expected outcomes based on probabilities, preferences, and potential payoffs.Â
6. Game Theory for Strategic Decision-Making
The name of this mathematical concept is as interesting as what it helps businesses with. With the help of this framework, businesses can figure out how and why people make decisions in certain situations. With a blend of mathematics and statistics, businesses can set prices, decide whether to acquire a firm, and determine how to handle a lawsuit. This mathematical concept intends to help key stakeholders in strategic thinking and decision-making
7. Permutations & Combinations
When it comes to mathematics for business then permutations and combinations are key pillars. Permutations are special combinations where order matters the most while combinations are a particular type of permutation where order doesn’t matter. To understand the business and mathematics of permutation and combination, imagine a hedge fund manager needs to identify several possible portfolios for a new fund. To tackle this situation, the fund manager will create a portfolio where all the stocks have the same weight, and the order of the stocks doesn’t matter.
*mathematicalmysteries.org
8. Compound Interest
Business and mathematics of compound interest is something you will experience time and again. This concept of mathematics for business is majorly used in investment companies and mutual fund companies. You must have heard a lot about compounding. Even banks and various financial institutions use compound interest to calculate loan EMIs and other things.
9. Ratios & Proportions
They are concepts of mathematics for business through which managers and key stakeholders compare quantities. Investing companies use liquidity ratios, profitability ratios, solvency ratios, and the likewise to assess the health of a stock.
10. Correlation And Regressions
Correlation and regression is the concept of mathematics for business that statisticians use to analyze relationships between 2 variables. With mathematics and statistics, businesses can explore the following through correlation and regression analysis – sales forecasting, marketing strategies, resource allocation, improving operations, improving employee efficiency, and analyzing quarterly results. This concept helps businesses understand the strength and direction of relationships between 2 variables.Â
Business And Mathematics Are Inseparable
If you are a non-maths student then you must be having difficulties in understanding mathematical concepts. On the other hand, mathematics, statistics, and business are indeed inseparable. One major difference between school math and mathematics for business is that while at school, you have to solve a problem with a pen, paper, and a calculator. But when you step into the corporate world, you solve real-life problems with the help of tools and software.Â
But at the same time, you must know the relationship between business and mathematics, and you should have a fair idea about various concepts of mathematics for business.
Time To Kickstart Your Career With Jaro Education
By now, you must have a fair idea that these concepts of mathematics for business play an integral part in any business setup because they boost operations and production in leaps and bounds. Be it mathematics or statistics, businesses need these concepts from time to time to assess situations, circumstances, and the overall health of the organization.Â
Now the question is where to polish business and mathematics skills. Jaro Education has a solid answer to this question. Online BBA Degree Program – Dr. D.Y Patil Vidyapeeth Centre For Online Learning (DPU-COL) is a multi-disciplinary program that enables students to acquire entrepreneurship skills and stay ahead of the curve. During the 3 years, you will understand the ins and outs of the corporate world along with the relationship between business, mathematics, and statistics. This BBA program aims to curate a unique combination of different management subjects and to meet the demands of the modern business world.Â
Jaro Education is the hub where you can explore world-class Undergraduate and Post-graduate certification programs that enable you to polish your skill sets and explore your passion through professional certification programs by some of India’s biggest universities. Here’s why millions of students trust Jaro –
- It provides a throughout learning support.Â
- The team at Jaro provides unparalleled career guidance and support.Â
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