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Business Analysis
Copyright 2006 – Biz/ed
http://www.bized.ac.uk
Business Analysis
Copyright 2006 – Biz/ed
http://www.bized.ac.uk
Business Analysis
• Purpose:
– Identify where the business stands
in relation to rivals, etc.
– Collect and use data to inform
business decision making
– Identify strengths and weaknesses
in the business
– Use information to inform strategic
planning
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Business Analysis
• Method:
• Collection of data
from a range of sources:
• Market research
• Past sales data
• Market growth data
• Specialist analyst data
• Secondary data, e.g. Mintel
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Data
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Analysis
• Range of methods used to analyse data:
• Trends
– Growth rates
– Nominal
– Average
• Mean
• Median
• Mode
– Variance
• Standard deviation
• Range
– Time series analysis
– Scatter graphs
• Correlation
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Trends
• Looking for patterns
in data collections
• Frequency and reliability of trends
• Impact of external factors, e.g.
seasonal variation, random events,
cyclical trends
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Averages
• Averages are a measure of central
tendency – the most likely or
common item in a data series
• Calculated through 3 measures:
– Mean
– Median
– Mode
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Averages
• Mean = Sum of items
in the series/number of items
X = Σx
x
• Median = middle number
in a data series – 0.5 (n+1)
• Mode = the most frequently occurring
value in a data series
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Variance
• Averages have limitations – measures
of data spread used to assess width
• Range – difference between
the highest and the lowest value
• Standard Deviation – used to
measure the variance of the data set
from the mean – can highlight
how reliable the mean is as being
representative of the data set
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The Standard Deviation
S=
Σ (xi – x )2
n
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Correlation
• The degree to which there is
a relationship between two
or more random variables
• The closer the relationship the
higher the degree of correlation
• Perfect correlation would be
where r = 1
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Time-Series Analysis
• Used to analyse movements
of a variable over a time period –
usually years, quarters, months, etc.
• Importance of assessing the:
–
–
–
–
Trend
Seasonality
Key moments
Magnitude
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Presentation
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•
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•
Graphs
Charts
Tables
Index numbers – Method of showing average
changes in large amounts of data
– Laspeyres – Uses a base period weighting
measurement
– Paasche – Uses a current price weighting
measurement
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Forecasting
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Qualitative
•
•
•
•
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Focus groups - a group of individuals selected and assembled
by researchers to discuss and comment on, from personal experience,
a topic, issue or product
User groups – similar to focus groups but consisting of those
who have experience in the use of a product, system, service, etc.
Panel surveys – repeated measurements from the same sample
of people over a period of time
Delphi method – calls on the expertise and insights of a panel of
experts to help with forecasting – seen as being more reliable than
data analysis only
– Could be drawn together from around the world as there is no
need to have people together at the same time
In-house judgements – Use the expertise and judgements of those
involved in the business in aiding and making judgements
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Quantitative
• Makes use of all the statistical data collected
by the firm and by other firms/organisations
to help inform decision making
– Surveys
– Sales data
– Impact on sales
• Primary data – collected by the firm
themselves
• Data collected by others and used by the firm,
e.g. Office of National Statistics (ONS), Gallup,
Mori, Mintel
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Forecasting
• Advantages and disadvantages:
• Data from several years can give
accurate guides to future performance
• Statistical techniques can make
the data informative and useful
• All depends on the quality of the data
and the accuracy of the techniques
used to analyse the data
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