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Business Analysis

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Business Analysis

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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

Σ (xi – x )2
S=
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
• 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
• 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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