2a. Understanding Business Performance - Using Quantitative Data To Make Business Decisions

What is quantitative data?

Statistical numeric data that can be used to support decisions making. It needs to be accurate and interpreted correctly if it is to be useful. It may be collected from primary or secondary sources

What are the ways quantitative data can be collected?

• Primary data - information collected first hand for a specific purpose

• Secondary data - information that has been collected previously by someone else for a different purpose

What are sources of quantitative data?

• Graphs and charts

• Financial data

• Marketing data

• Tables or infographics (a visual representation of quantitative data in a way that makes the info interesting and easy to understand)

What is a bar chart?

What is a pie chart?

What is a scatter graph?

It allows a relationship between two variables to be identified

• Positive correlation - when an increase in one variable leads to an increase in another; an upward trend

• Negative correlation - when an increase in one variable leads to a decrease in another; downwards trend

Correlation may be strong or weak:

Strong - allows a ling of best fit to be applied with ease

Weak - exists if it’s difficult to identify a line of best fit

What is financial data?

Used to support decision making including:

• Sales revenue

• Profit

• Costs

• Tax

• Interest and exchange rates

• Valuations of assets

• Bank balances

Companies need to send key financial data to Companies House each year whereas sole traders and partnerships may keep this information private

What is marketing data?

Collected through primary and secondary market research

• Surveys

• Focus groups

• Observation

• Customer feedback

• Retail or online footfall

• Government or trade publications

• The media

Marketing data can help business managers forecast sales and to make decisions about product development and promotional plans

What is market data?

The characteristics and performance of the market in which a business operates such as:

• Demographic data - the market’s population structure such as age, gender and income statistics

• Market dimensions - factors such as the size of the market, the market shares of key competitors, the rate of the market growth and average prices across the market

• Investment data - the prices of materials (e.g. oil) as well as exchange rate data and stock market performance

How can market data help a business?

Market data can help a business identify and plan for new opportunities and spot external threats, such as the increased power of a competitor. It can also be used alongside other types of quantitative data to make investment decisions