Data analysis

A bsuiness can use data they have collected about topics such as cost, sales, markets, profits, and customer trends to their benefit. Presenting this data in the most efficient way will allow them to see important statistics such as how much of their total costs comes from materials or labour costs. 

It can be used to 

• forecast future sales
• make comparisons to competitors
• make them aware of seasonal variations
• ensure customer satisfaction is maintained

Some businesses can use data that has been analysed by external companies and apply it to their own business. Examples of such businesses includes governemnt reports, for statistics such as inflation rates, or industrial bodies such as ABTA.

A pie chart is a circular chart which is split into segments to show percentages or the relative values of different categories of data such as market share. 

Pie charts give a clear visual impression of the relative sizes of segments and allow easy comparisons between them. They do not provide very detailed information, but give a good overall picture. 

They are also useful for inter-firm comparisons such as the mix of products (product portfolio) which each of them sells. 

Pie charts are not effective for showing changes in trends over time. 

A bar chart is a chart whose bars are proportional in length to quantities. It is useful for discrete data, such as number of sales. 

It allows quantities to be compared easily, and allows large quantities of data to be summarised in visual form. It also allows a quick and easy check of the accuracy of calculations, as anomalies are easily identified.

A line graph is a type of chart which displays information as a series of data points connected by straight line segments. 

Line graphs allow changes to be tracked over a period of time. When the changes are small, line graphs show the changes more effectively than a bar chart. 

Line graphs are easy to understand and interpret, and show patterns in data clearly. Data can be extrapolated from a line graph to predict future sales. 

However, it can only be used to show changes over time. 

Index numbers are a useful method of showing changes over time in collections of data such as price levels. The use of index numbers allows data to be standardised over time so the data is easily comparable. A selected point is given the value of 100 and others are compared with it. The Retail Price Index (RPI) is the most common examples of an index. 

1. Decide on a base year which is given the value of 100.

2. Calculate the index numbers of other years using the calculation-

Next years data/Base years data x 100

It is used to analyse the data and identify trends and forecasts. It calculates the percentage increase in price/costs/production. It provides clear data, and lets businesses set targets for improvement which can be easily measured.