Cluster Analysis: The Statistical Perspective

Cluster development has been the rage in economic development for the past decade. It is being practiced worldwide. It is important to understand the statistical foundation of cluster analysis if your organization is planning to go down the cluster development path.

What is "cluster analysis?" It is the statistical method for partitioning a sample into homogeneous classes or groups to produce an operational classification. This may help the analyst to formulate appropriate hypotheses concerning the origin of the sample.

Cluster analysis is a data analysis tool for solving classification problems. It can be used to sort cases (people, things, events, industries, busineses, etc.) into groups, or clusters, so that the degree of association is strong between members of the same cluster and weak between members of different clusters. It may reveal associations and structure in data which are not readily apparent to a researcher.