Qualitative Analysis – Definition

Cite this article as:"Qualitative Analysis – Definition," in The Business Professor, updated December 2, 2019, last accessed September 25, 2020, https://thebusinessprofessor.com/lesson/qualitative-analysis-definition/.


Qualitative Analysis Definition

The qualitative analysis started as an analysis technique in chemistry before its use extended to different disciplines and fields. It is a form of analysis that seeks to identify the qualities of a particular specimen or elements in a sample. Qualitative analysis entails the use of non-numerical or non-quantifiable information about a specimen or element. This means that this type of analysis explores a wide range and is not limited in terms of data available to analyze a subject matter.

Quantitative analysis is quite different from qualitative analysis because it focuses on information provided in reports which are quantifiable or can be numbered.

A Little More on What is Qualitative Analysis

Qualitative analysis is often used to analyze an operation or evaluate an investment, business idea or opportunity. This type of analysis relies on non-quantifiable information which goes beyond information supplied in the balance sheet or annual reports of a company. For example, the qualitative analysis takes into cognizance the role of company expertise, managerial skills, the accuracy of research and other information it can draw when doing an analysis.

Despite that both qualitative and quantitative analyses are used in most cases, there are certain points that distinguish the two. Quantitative analysis focuses on information that can be drawn fro numerical metrics, balance sheets, financial statements, and other reports while qualitative analysis focuses on intangible information which is not mathematical.

Understanding People and Qualitative Analysis

Typically, qualitative analysis focus on information or data that machines of mathematical metrics cannot provide, it relies on non-quantifiable information such as management systems, customer experience and satisfaction, workplace cultures, trusts, and other core aspects relating to people. Qualitative analysis pays much attention to ‘people’, this is why it undertakes tedious tasks of finding out all systems and matters relating to people.

Oftentimes, qualitative analysis deals with guts or fellings, this approach to analyzing a subject matter is more critical, time-consuming, brain tasking and overly demanding than the quantitative approach. For instance, if an investor wants to do a qualitative analysis of a company, the management system, organizational structure, professional backgrounds of employees, their qualifications, perspectives, and others will be looked at.

Company Culture and Qualitative Analysis

People are at the core of every company, they inform the way the operations of the company will look like, the cultures that will exist in the company, the management, and others. People who intend to work at a company also look at the management of the company and the categories of people therein. Whether the management of a company is capable of motivating its employees and getting the best out of them is essential. The kind of hierarchy that exists in a company, the culture; whether they are safe cultures or toxic ones are also considered. All these factors and many others affect the performance and productivity of a company. They also play vital roles in the categories of employees a company will attract.

Gathering Data for Qualitative Analysis

Collating or sourcing data for qualitative analysis is a tedious work that cannot be left for an individual to do. In most cases, qualitative analysis requires collaborative work between people who must have expertise on qualitative analysis techniques and accurate gathering of data. For instance, in qualitative analysis, information such as management expertise, communication structures, and styles, workplace culture, industry cycles, hierarchical structure, philosophies, and records pertaining to a company are gathered. The objectives of the analysis will also inform the strategies and type of information and data that will be needed for such an analysis.

Qualitative Analysis in Context

In practice, qualitative analysis does not just focus on the management and employees of a company, it also pays attention to a company’s customers. Outside customers, the success of a company is impossible, due to the crucial roles that customers play in the success of a company, a qualitative analysis that leaves customers out is no good analysis. Hence, when using qualitative analysis in context, the types of customers company has, their approach and perspectives about the products of a company, their level of satisfaction, review of products, feedback, both positive and negative ones must be explored. Good customers do not only gove a company a competitive advantage, but they also inform the business model on which a business is run.

Below are the key takeaways of qualitative analysis;

  • Qualitative analysis uses non-numerical information or non-quantifiable information to make subjective judgments.
  • Qualitative analysis is different from quantifiable analysis because quantifiable analysis relies on data extracted from mathematical metrics, balance sheets, statistics and financial statements of a company.
  • People are central to qualitative analysis, this analysis relies on intangible information that is not informed by numerics or statistics.
  • Qualitative analysis seeks to understand management systems, people, culture, hierarchy, perspectives and trends peculiar to a company.

Real World Example of Qualitative Analysis

Qualitative analysis has been used in many real-life scenarios to understand people, management, company cultures and other crucial aspects of a company that cannot be measured by statistics or numbers. While quantitative analysis seeks to measure things related to numbers and statistics, the qualitative analysis focuses on understanding systems and cultures work.

McDonald’s Corp’s is an example of a company that has undertaken the qualitative analysis.

References for “Qualitative Analysis”

https://www.investopedia.com › Investing › Financial Analysis





Was this article helpful?