Factor analysis

Examples of Factor analysis in the following topics:

• Two-mode factor analysis

  • Factor analysis provides an alternative method to SVD to the same goals: identifying underlying dimensions of the joint space of actor-by-event variance, and locating or scaling actors and events in that space.
  • The method used by factor analysis to identify the dimensions differs from SVD.
  • Figure 17.10 shows the eigenvalues (by principle components) calculated by Tools>2-Mode Scaling>Factor Analysis.
  • The factor analysis method does produce somewhat lower complexity than SVD.
  • The first factor, by this method, produces a similar pattern to SVD.

• Intorduction to qualitative analysis

  • This is because the various dimensional methods operate on similarity/distance matrices, and measures like correlations (as used in two-mode factor analysis) can be misleading with binary data.
  • Even correspondence analysis, which is more friendly to binary data, can be troublesome when data are sparse.
  • This approach doesn't involve any of the distributional assumptions that are made in scaling analysis.

• Scanning and Analysis

  • One approach is the PEST analysis.
  • Of the four categories explored in the PEST analysis, the company has the least control over economic factors.
  • Two more factors, the environmental and legal factor, are defined within the PESTEL analysis (or PESTLE analysis).
  • The segmentation of the macro environment according to the six presented factors of the PESTEL analysis is the starting point of the global environmental analysis.
  • The six environmental factors of the PESTEL analysis are the following:

• The PESTEL and SCP Frameworks

  • A PESTEL analysis looks at the six most common macro-environmental factors to understand their interactions.
  • A PESTEL analysis is a useful strategic tool for understanding market growth or decline, business position, potential, and direction for operations.
  • Political factors include how, and to what degree, a government intervenes in the economy.
  • Social factors can be very difficult to measure with certainty.
  • Industries like tourism, farming, and insurance are especially affected by these factors.

• Sensitivity Analysis

  • Sensitivity analysis determines how much a change in an input will affect the output.
  • When dealing with expected resources and demands, uncertainty is a major factor.
  • Sensitivity analysis is a statistical tool that determines how consequential deviations from the expected value occur.
  • Sensitivity analysis can be useful for a number of reasons, including:
  • The sensitivity analysis entails changing each variable and seeing how that changes the output .

• Analysis of Variance Designs

  • Be able to identify the factors and levels of each factor from a description of an experiment
  • Determine whether a factor is a between-subjects or a within-subjects factor
  • Therefore, "Type of Smile" is the factor in this experiment.
  • If an experiment has two factors, then the ANOVA is called a two-way ANOVA.
  • The factors would be age and gender.

• Scenario Analysis

  • Scenario analysis is a process of analyzing decisions by considering alternative possible outcomes.
  • Scenario analysis is a strategic process of analyzing decisions by considering alternative possible outcomes (sometimes called "alternative worlds").
  • For example, a firm might use scenario analysis to determine the net present value (NPV) of a potential investment under high and low inflation scenarios.
  • The purpose of scenario analysis is not to identify the exact conditions of each scenario; it just needs to approximate them to provide a plausible idea of what might happen.
  • This scenario analysis shows how changes in factors like yield and transport cost can affect profits.

• Conducting a Situational Analysis

  • A situation analysis is often referred to as a "3C analysis", but when extended to a 5C analysis it allows businesses to gain more information about the internal, macro and micro-environmental factors within the environment.
  • To fully understand the business climate, there are usually many different factors that can affect a business, and if researched well it will create a company that can respond well to change.
  • An analysis on the climate is also known as the PEST analysis.
  • It considers the following factors:
  • A SWOT analysis can be a useful tool in conducting a situational analysis.

• SWOT Analysis

  • A method of analyzing the environment in which businesses operate is referred to as a context analysis.
  • A SWOT assessment involves specifying the business's objective and then identifying the internal and external factors that are favorable and unfavorable toward the business's ability to achieve its objective.
  • Identifying SWOTs is essential, as subsequent stages of planning can be derived from the analysis.
  • The SWOT analysis matrix illustrates where the company's strengths and weaknesses lie relative to factors in the market.
  • Explain how a SWOT analysis can be used as a tool in strategic decision making

• Interpreting Ratios and Other Sources of Company Information

  • Financial statement analysis, also known as financial analysis, is the process of understanding the risk and profitability of a company through the analysis of that company's reported financial information.
  • There are four methods for making these types of comparisons: vertical analysis, horizontal analysis, ratios, and trend percentages.
  • This type of analysis is especially helpful in analyzing income statement data .
  • The only limiting factor in choosing ratios is that the items used to construct a ratio must have a logical relationship to one another.
  • In vertical analysis each item is expressed as a percentage of a significant total.