Measuring economic activities is a complex undertaking. A clear understanding of what it is that makes up such an activity is a prerequisite for the successful measurement of its value. In other words, an activity cannot be measured if at all its value is not known! That is why it is very important to consider input from those most directly affected by the economic activity, as well as other people who have more analytically relevant information.
A wide variety of different types of organizations must be considered in order to answer the question posed. For instance, we must take into account government reporting and statistical documentation, private organizations within a broader context, academic institutions, non-profit organizations, and businesses themselves. Then there are numerous types of “activities.” One can ask, “What type of activities?” or “How many activities?”
An activity can be an investment, an action, a process, a product, or a combination of any of these items. The goal is then to be able to measure the value of these activities over time, in relation to some underlying indicator. An important concept is that an activity can be measured for one thing and then modified for another thing. Thus, for example, I might modify my original activity measure to say that the value is the percentage increase in the company's gross sales over time. This would then be measured against some standard of value, such as profits.
The standard of value used is necessarily relative. The way I measure my original economic activity is by averaging over time the results of several different models. It might be a positive earnings model and a negative one. But this still leaves questions, such as, “If the average is negative, does that mean that the business is losing money?” To measure the value in terms of dollars, a mathematical formula is needed that can take into account the nature of the business in question.
The third type of activity is an economic activity that has been measured previously. The question is, “how did the measurement to get its result?” Is it some simple economic process or a more complicated one? Sometimes the answer is a lot simpler than one might suspect.
When it comes to measuring economic activities, there are as many answers as there are businesses. However, the key to success is in getting the measurement right. A good way to do this is to rely on an activity that has been done, time again, by other businesses. These companies have measured almost everything, so it can safely be assumed that they will do the same when it comes to measuring business activities. As . . . . . . they have done so, it is likely that they will be able to share relevant and useful information with you.