Business Investigation

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Objective of this section is to add to a method for investigating a new business ... Business examination more often than not does not give numerical responses to valuation ...

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Business Analysis We will concentrate on the principal period of business examination, concentrating on inner and outer investigation Where We Are Going Chapter 3

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First Phase of Security Analysis Business Analysis GAAP Financial Statements Financial Statement Analysis Forecast Assumptions Valuation Time Historical Periods Valuation Date Forecast Periods

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Understand the business Goal of this section is to build up a method for dissecting a new business The Key to Developing a Forecast is to

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Business Analysis Highlights issues we have to concentrate assist in the money related explanation investigation organize Business investigation for the most part does not give numerical responses to valuation presumption, then what's its motivation?

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Financial Statement Analysis Identifies worries that require more point by point business investigation

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Internal Analysis Studies a Firm's. . . Mission Human assets Product life cycle Marketing and offering Pricing and separation Supply chain Finance Investment needs Products and administrations

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External Analysis Analyzes Industry financial matters Individual contenders Customers Governmental directions Q: What separates amongst outer and interior examination?

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External Analysis—Industry Economics This study decides the objective company's Returns High return draw in more rivalry Intense rivalry thusly brings down return Profitability Cash stream Based on the Porter's Five Forces Framework

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Porter's Five Forces Framework: Forces Driving Industry Competition Potential Entrants Existing Competitive Rivalry Buyers Suppliers Substitutes

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External Analysis—Individual Competitors Goal : To comprehend the current contention on a macroeconomic level Factors to build competition More contenders Low industry development Limited item separation High settled costs Excess industry limit

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External Analysis—Potential Entrants Goals: To know quantities of potential contenders How they will influence aggressive competition Barriers to passage: Economies of scale Product separations High capital needs Difficulty of acquiring certain assets Access to conveyance channels Cost burdens Specialized innovation and licenses

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External Analysis—Substitute Products Goals: To see how substitute items can evacuate benefits To consider the accessible substitute items Example: Coffee versus Tea Rice versus Flour Coke versus Pepsi … ..

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External Analysis—Buyers Goal: To comprehend the clients' solid dealing position Factors to build haggling power Homogeneous item Many providers Customers purchase expansive amount Customers act in show

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External Analysis—Suppliers Goal: Understand that providers for the most part have additionally bartering energy to raise costs and lower quality if there are just a couple of them and if there are very few substitutions for their items. Illustration: The Major League Baseball Players Association Microsoft?

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Individual Competitor Assessment Goal: Understand particular key techniques of key contenders on a microeconomic level with an eye toward how every will influence the objective organization Questions to ask while investigating singular contender P. 48

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Individual Competitor Assessment Continued Includes: Strategies Products Marketing Supply chain Profitability

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Customer Analysis Goal: To see how the clients' needs drive request Price versus quality Trends in clients' needs Understand both the middle channels and a definitive clients Demographic patterns, acquiring propensities, dispositions and utilization data

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Governmental and Regulatory Analysis Goal: To comprehend the administrative and administrative environment of a firm Regulated industry: utilities Pollution measures Licensing necessities Food and medication wellbeing rules

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Mission Internal Analysis Products and administrations Product life cycle Pricing and separation Marketing and offering systems Supply chain Human assets Investment needs Finance/bookkeeping

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Internal Analysis—Mission What the firm would like to achieve Understanding the organization's main goal puts these business procedures and activities in context so that the expert can better anticipate the company's future

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Internal Analysis—Products and Services What do items and administrations do? How does the client utilize them? What is the market scope? Characterized by region Certain innovation Customer sort What are the profundity and broadness of the organizations item? versus William Wrigley Jr.

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Internal Analysis—Product Life Cycle Sales Introduction Growth Maturity Decline Phase Costs fluctuate with these stages R&D, advancement Firms or ventures invest diverse measures of energy in every stage

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Internal Analysis—Pricing and Differentiation The more separated the item, the less rivalry concentrates on value Differentiation versus Value Competition The more separated the item the less rivalry concentrates on costs Wal-Mart's versus Nordstrom's Natural Foods versus Stores

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Internal Analysis—Marketing and Selling Strategies Goal: To comprehend the company's system for conveying the item to the client Advertising: TV, radio, daily paper, magazines or web? Advancements: value rebates, free item, client's motivating forces

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Internal Analysis—Supply Chain Goal: To see how every part works keeping in mind the end goal to venture future income An extensive rate of costs happen in the production network

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Internal Analysis—Supply Chain Includes Elements: significance varies for various kind of firms Purchasing Manufacturing Research and improvement Distribution

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Internal Analysis—Human Resources Goal: To comprehend the qualities and shortcomings on the general population side Leadership capacity and style Core capabilities The unique aptitudes and capacities that permit it to be effective

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Internal Analysis—Investment Priorities Goal: To recognize what makes a firm fruitful through comprehension its speculation needs Priority of systems: what a firm will do if a contender tires to meddle with its business Advertising Pricing Capital venture Legal moves

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Internal Analysis—Finance/Accounting Goal: To see how the association's bookkeeping techniques, assessments, and judgments influence the monetary explanations Cost structures High edges versus substantial volume

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Summary We have realized: Why business investigation is pivotal to security valuation How to set up an outside examination of the firm

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Summary Continued How to set up an interior examination of the firm Where to get data for business examination Annual reports Magazine Newspapers Company site Government data Analyst reports Internet seek