Analysis by function is intended to give a global view of the production or the expenses of a unit according to a given need taking into account invoice and non-invoice activities. For example, the following functions can be distinguished: education, defense, housing, clothing, marketing, transports...
The aim is to observe how a given need is satisfied by all activities sectors.
An analysis by function can therefore cover numerous industrial sectors.
Some production activities are non-invoiced activities, and as a consequence are not normally recorded or measured for statistical purposes. Analysis by function is concerned with studying all invoiced and non-invoiced activities.
For example, in business statistics, one can distinguish between the following functions: production, buying, R&D, sales and marketing, administration, accounting, management, (internal) transport, repairs, trading, etc. These functions when they represent ancillary activities (activities rendered inside an enterprise in order to be able to carry out other activities) are generally non invoiced but they are taken into account by analysis by function.
Functional analysis has generated some specific classifications:
- COICOP (classification of individual consumption by purpose) for household expenditure
- COFOG (classification of functions of government) for governmental expenditure.
- COPNI Classification of the purposes of non-profit institutions.
- COPP Classification of outlays of producers by purpose.