Qualitative factors

Qualitative factors are decision outcomes that cannot be measured. Examples of qualitative factors are:

  • Morale. The impact on employee morale of adding a break room to the production area.

  • Customers. The impact on customer opinions of a business if an investment is made in answering their phone calls in less time by adding customer support staff.

  • Investors. The impact on investors of conducting a road show to meet as many of them as possible.

  • Community. The impact on the local community of allowing employees to spend a few hours of paid time assisting with community projects.

  • Products. It may be possible to use somewhat cheaper components in products. However, if this is done too much, it may create an overall impression of reduced quality, which may lead customers to buy fewer products.

A manager should consider qualitative factors as part of his or her analysis of a decision. Depending on the manager and the level of investment involved, qualitative factors can be the deciding point in whether to engage in a certain activity. For example, if a large investment of funds is involved, the key decision factors are more likely to be quantitative, since the investing business has a great deal at stake in the decision. However, if the investment of funds is minor, the impact of qualitative factors could play a more important role in the decision.

From a branding perspective, qualitative factors can be particularly important. Proper branding requires high expenditure levels to establish and maintain an aura of quality, which a purely quantitative analysis might not justify.

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