Factor analysis has been traditionally utilized for three broad purposes:
A data reduction technique which will hopefully simplify a multivariate situation to a smaller set of dimensions and enable the researcher to utilize data on a large number of variables
As an indexing device in which overtly manifested data are transformed to provide the latent or unobservable trait of a phenomenon
As a cluster technique which helps the researcher to classify a variety of observations into a small set of clusters which are also generally ordered.
