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Key Business Analytics by Bernard Marr

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16

Factor analysis

What is it?

Factor analysis is the collective name given to a group of statistical techniques that are used primarily for data reduction and structure detection. In modern business we are inundated with data. New data, old data, new types and formats of data – we are literally drowning in the stuff. And having too much data can be just as useless and debilitating as having too little.

Factor analysis can reduce the number of variables within data to help make it more useful. This reduction in variables within the data also makes it much easier to detect a structure in the relationships between those variables which makes the variables easier to classify.

This is made possible because of a key concept – that multiple observed ...

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