Graphs & Charts in Business: Importance, Use & Examples

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

After reading this lesson, you'll understand why graphs and charts are used so often in business and how they make the conveyance of information much easier and clearer.

Importance of Graphs and Charts in Business

Walk into almost any business meeting and you'll see one of these talked about at some point. What is it? It's either a graph or a chart describing something about the business. It could be a chart showing the progress the team is making on a big project. Or it could be a graph showing the sales of the business and comparing it with the sales of the competition. Either way, these graphs and charts make the information much easier to digest and understand.

A graph or a chart may be defined as a visual presentation of data. For example, a utility company uses a column chart to help its customers see just how much energy they have used during the last billing cycle. A bakery may use a pie chart to show how many breads it sells when compared to its other products such as cheesecakes and apple pies.

Using Graphs and Charts in Business

Businesses have many uses for graphs and charts. And there are many types of graphs and charts making it easy for a business to choose the one that fits their needs the most. Let's take a look at some choices of graphs and charts available to businesses.

Column and Bar Charts

The first that we will look into is called a column chart. This type of chart has vertical columns. The height of each column, for example, tells you how much the corresponding item is. If instead of columns, the chart has horizontal bars, then it is called a bar chart.

Businesses can use column or bar charts to compare products or to show how much is used each day. This type of chart lends itself well as a comparison tool as it's easy to visually see which item's column or bar is taller or longer.

This chart, for example, shows the number of ice cream sales this past week.

A column chart
charts in business

You can easily see that Sunday had the largest number of ice cream sales while Wednesday had the least.

Line Graphs

Line graphs are those graphs that show your data as a line. Each successive data point is connected to the previous. This type of graph is best suited for data that is continuous in nature, such as showing the operating temperature of a computer chip over time. For example, a computer company can use a line graph to show the temperature of its processor as a person is using it for both easy word processing tasks and then some intensive gaming tasks. You'll see the line curve up and then down.

Pie Charts

Pie charts are those charts that look like pies, hence, the name. Each pie is split into slices with each slice representing one particular group of data. The size of the slice shows you how much of that group of data you have. Businesses can use pie charts to show their market size, such as this one showing how much of the market a particular shoe company has.

A pie chart
charts in business

This shoe company's market share happens to be 65 percent of all shoe sales. So you can see that its sales cover the majority of the pie.

Doughnut Charts

Doughnut charts are similar to pie charts except they have a hole in the middle. These can be used the same way as pie charts to show how much each item covers in relation to the total. Since there's a hole in the middle, you can add a graphic detail in the middle such as a title or descriptive text. If you want to highlight a particular piece of data in the doughnut chart, you can add that information to the hole in the center.

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