1. What are the advantages and disadvantages of quantitative analysis?

 

Advantages are as follows:

  • Easy collection of data and usage of randomization: In quantitative analysis all the data is easily available for most companies on their websites or any social media platforms. Also for analysts use randomization to jumble the data collected and there is no chance of personal biases. 

  • Quick analysis: After collection of data analysis is very easy as all the data is in statistical form and all sorts of computer tools can be used for analysis such as excel or SPSS or any other.  As a result, interpretation of data and presentation of findings is straightforward and there are less chances of error and subjectivity.

  • Reliability: Quantitative analysis involves complex statistics and data analysis which is done through computers and latest technology so the results are highly accurate and reliable for future purpose but the implication of plan according to these results may vary as there is always a risk of uncertainty while implementation. 

 

Disadvantages are as follows:

  • Wrong data: Quantitative research is entirely based on the data available from the company in case if the data is manipulated then the results can vary drastically as the data set taken is wrong. This all can happen because many companies still practice window dressing practices. Also by solely focusing on numbers might not be a good idea as there are other risks as well like the environmental or political risk etc.

  • Can only be done by experts: In quantitative analysis all the analysis needs to be done by experts only as they have the right skillset to analyze the data and give proper results, an ordinary person is not capable of doing these analyses due to lack of knowledge. Analysts carefully develop various hypotheses and set up a model for collecting and analyzing data. 

  • Expensive method: Quantitative analysis requires a lot of supervision and the latest technology such as high processing computers and all so it is usually very expensive and time consuming. Most companies think a lot before doing quantitative analysis due to the same reason, since it is an irreversible decision.

2. Applications of Quantitative Analysis in the business sector

 

Managers usually make decisions based on their experience or instincts but with the emergence of more and more quantitative analysis it enables them to make the best estimates and thus minimize the risks associated with a particular decision. Ideally, these analyses provide managers with a better understanding of information, to enable them to make the best possible decisions in the given situation. Few of the real life area where quantitative analysis is used are:

  • Production Planning

Quantitative analysis assists managers to make informed product-planning decisions. It helps to estimate the size and location of a new production facility or to assess different proposals for costs, timing, and location. With effective product planning and scheduling, companies tend to serve and satisfy their customers’ needs which is their prime motive and also earn sufficient profits. 

  • Marketing

Every business should have a well-defined marketing strategy for future growth. So with the help of accurate quantitative analysis, marketers can find an easy way of setting the required budget and allocating media purchases. Then decisions can be based on the results the company gets from the data obtained from marketing campaigns and feedback forms.

  • Finance

In finance quantitative analysis plays a crucial role such as accounting personnel use different quantitative data and methods like the discounted cash flow model or dividend growth model to estimate the as accurate value of an investment as possible. Similarly the prices of the products can also be determined and so the profits can be earned according to the targets setup by the company. 

  • Purchases and Inventory

Here quantitative analysis helps companies to determine how much materials they need to purchase, how much should be the level of inventory to maintain, and the various costs which could likely occur when shipping and storing of finished goods is done.

  • Project Management

Quantitative analysis also helps to find the best ways of allocating resources, especially when the resources available to all are scarce. Projects can then be rescheduled based on the availability of certain resources. It also tells which project is more feasible for the company among the various alternatives available. Few could be more tax savvy or more labor intensive so by proper analysis one can know which project gives maximum profits.

 

 

Mostly it is advisable to use a mic of both quantitative and qualitative analysis for best results. For example using quantitative analysis for identification of various investments and then using qualitative analysis for identifying the final investment.