International Management SIB600

Lies, Damned lies, and Statistics

ESSAY

In 1990, Kenichi Ohmae, Japanese management consultant published the Borderless World. This book explores many issues specific to International Management. One of them is Lies, damned lies, and statistics. which is going to fully explained in detail form in the next paragraphs. Ohmae sustains that the flows of activity as measured by trade statistic only show half part or less than portrait of the economy and its relationship between partners. This is the case of United States and its structurally irremovable trade deficit with several of its major trading partners, in this case Japan. This last one considered as one of the biggest countries because of its growth economy. In contrast with United States, a country that one day was one of the most powerful in terms of export and now is actually facing a serious trade deficit because of strong U.S demand for imported products that are produced at a lower cost that similar products can be produced in the United States. He points out that this macroeconomic charts is very well known for the audience and its fine at certain point, however; Ohmae arguments that even these statistic are well structure, they are not complete at all, they lack in some way of real information. He basically mentioned that United States what is trying to do is to expand its domestic economy to encompass its trading partners. For example; if United States bought goods from abroad, they are recorded as imports. But because the currency with

International Management SIB600

they buy all these staff is categorized in dollars, it cannot be recorded as an Import, which brings as consequence a trade imbalance, where the dollar cannot be accepted by any Americas trading partners as settlement currency. This will be a serious problem where United States would be one of the most affected in terms of money; borrow foreign money to pay for their excess import, which is something, illogic but at the same time something that can be avoided. In terms of export the author has a similar scenario, especially when a company produced something here and something there, when they license their technologies and receive risk- free royalties or when they enter joint ventures and strategic alliances of various sorts, when they outsource production or when they produce in the countries where their markets are located. They own equity and receive dividends. A 70% of these activities are not showed on statistics of service and activities. According to Ohmae, he states that we need new numbers that reflect in some way real events, transactions, activities, real flows of value and has to be preparing to any inconvenience in the future. The deficit is an illusion created by numbers that practically are out of date, systems that study only the physical flow of goods across national borders. Ohmae mentioned that trade is not the only part of the Macroeconomic; it examines the factors that affect itself such as changes in unemployment, GNI, GDP, inflation and so on. According to him the exchange rate should change to adjust for the differences in purchasing power of tradable goods and in rates of inflation and interest between the two countries in question. The only solutions they can improve export competitiveness is to improve their own productivity and quality of their goods.

International Management SIB600

Statistics have been recognized as one of the most successful tools around the years either in the field of medicine, business, finance, mathematics, science, and so on. But the question is in what these people is based at the moment of generate these numbers; watching TV, listening from someone else, or taking with a friend; they really take the necessary time to sit and study the case and according to that, decide what is true and what is not, no matter the consequences. The field of statistics is a dangerous field, where if we dont have the properly tools we can cause a huge damage to the other party or to the subject to be studied. Statistics teach people how to study data and make decisions. People learn how to collect and analyze data. They learn how to take samples. They also learn about probability, regression, and standard deviation.1 Under this concept we can say that statistics is not other simple field of the mathematics. This field is very helpful if we know how to apply it or study. Lies, damned lies, and statistics is a phrase describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.
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According to

this concept and Ohmae explanation, we can perceive that everything that is said, showed and explained is not always true, sometimes there are going to be appearances and manipulations used to an opponents point where most of audience are going to feel persuade from the very beginning by these data information (numbers); creating an idea about something that is not true and real at all. Statistics are basically group of numbers that are studied, forecasted and structured to specific subject. We need to be realistic when we talk and analyze about statists. It plays an important role on Human activity

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Field of Study: Statistics. Lies, Damned lies, and statistics, Wikipedia.

International Management SIB600

and according to that we can determinate many studies, such as GDP, GNI, rates of Unemployment, Trades, Income, and Revenues. However, most of people are considered innumerate in this field, what means that they are familiar with numbers, data, surveys and even if the numbers are less or more the same to them. But they are not the only one that can be considers as innumerate, we have the people who report them and even worse they dont know the people who predict them (information data). In other words what Ohmae said in his book is totally true, basically we are living in a world of lies, where not everything that is stated or diagnosed has to be true, to be sure of that we have to study the situation, study the numbers, study the economy, study the countries or the subjects to be exposed, this is the only way where we are going feel confidence at moment of saying something with base that is true. This is not only about numbers, is how the other part can be affects by a group of falsehood statics. They may misunderstanding how a problem has been defined, or been measured.3 However, we have to admit that in most of cases statistics are denominated as useful tool. Not all of them are considered bad. It sometimes can help as guide or recommendation to figure out something. Statistics are frequently

misleading if not outright inaccurate. Without a clear understanding of the nature of statistics and the definitions of statistical terms, the public believe the statistic-supported statements as if they are fact. 4 According to the authors point view it reflects that not everything that shine is gold, we need to be very careful in moment of sustain or said something because we dont know deeply what is the true behind of this.

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Harvard University, Staticts Lies,Damned lies, and statistics, Excel at Life

International Management SIB600

In addition, after gatherer all this information we can say that statistics is a dangerous field if we do not count with the proper tools to sustain them, but at the same time it plays an important role on Human activity, because from them we can determinate many field into the area of Business among others. In Lies, damned lies and statistics, one of the sections from Ohmaes Book, shows that not everything that is said and showed in statistics has to be true, many times people behind data information just showed what they want to show, no matters the rest. In the case of United States and its severe trade deficit there are lot information that is not showed and declared at the moment of present them in different charts, categorized them as a one of the countries with higher import level because of strong U.S demand for imported products that are produced at a lower cost that similar products can be produced in the United States and recognized to Japan as one of the biggest potencies because of its growth economy. Many times information data is hidden by statisticians or not counted by the country; whereby, statistics has to be designed and prepared in properly way to help people to make a decision about what they think need to be fixed and improved.

International Management SIB600

References

Wikipedia http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics Excel at life http://www.excelatlife.com/articles/statistics.htm Statistics http://somepeopledontlikestatistics.blogspot.ca/2011/04/there-are-3-kinds-of-lies-liesdamned.html Harvard University http://static.fas.harvard.edu/registrar/ugrad_handbook/current/chapter4/statistics.html