The Second Level of Business Analysis
The second level of business analysis adopts a different approach. It requires the investor to have a much deeper understanding of the people and the processes of the company through unusual means of obtaining information.
The four aspects we are interested in here:
1. Marketing strength
2. Sales ability
3. Research & Development capabilities
4. People factor
1. Is the company a strong marketing organization?
2. Is the company an above average sales organization?
3. Does the company have outstanding labour and executive relations?
4. For consumer franchises, are the storefronts consistently packed?
5. For production companies, are the book orders filled for next few years?
6. Does the company have depth in the management?
7. How effective are the company’s research and development efforts in relation to its size?
- Quality of research personnel
Reference text:
- Common stocks and uncommon profits by Philip Fisher
- The Essays of Warren Buffett by Larry Cunningham
The Third Level of Business Analysis
The third level of business analysis base its principles of analysis on a few concepts empirically distilled by Jim Collins in his book "Built to Last". The investor seeks to determine if the company can become larger than life and enter the likes of HP, 3M, P&G, General Electric, Ford, etc. This is much more demanding approach and requires the investor to have a very intimate understanding of the company from ground-up and top-down.
1. Does the company pursue a purpose that is greater than profits?
2. Does the company preserve a set of core principles and ideology, but also actively stimulate progress?
3. Does the company have audacious and stretched goals?
4. Does the company possess a cult-like culture?
5. Does the company develop its top management from internally?
Reference text:
- Built to Last by Jim Collins
- Good to Great by Jim Collins
The second level of business analysis adopts a different approach. It requires the investor to have a much deeper understanding of the people and the processes of the company through unusual means of obtaining information.
The four aspects we are interested in here:
1. Marketing strength
2. Sales ability
3. Research & Development capabilities
4. People factor
1. Is the company a strong marketing organization?
2. Is the company an above average sales organization?
3. Does the company have outstanding labour and executive relations?
4. For consumer franchises, are the storefronts consistently packed?
5. For production companies, are the book orders filled for next few years?
6. Does the company have depth in the management?
7. How effective are the company’s research and development efforts in relation to its size?
- Quality of research personnel
Reference text:
- Common stocks and uncommon profits by Philip Fisher
- The Essays of Warren Buffett by Larry Cunningham
The Third Level of Business Analysis
The third level of business analysis base its principles of analysis on a few concepts empirically distilled by Jim Collins in his book "Built to Last". The investor seeks to determine if the company can become larger than life and enter the likes of HP, 3M, P&G, General Electric, Ford, etc. This is much more demanding approach and requires the investor to have a very intimate understanding of the company from ground-up and top-down.
1. Does the company pursue a purpose that is greater than profits?
2. Does the company preserve a set of core principles and ideology, but also actively stimulate progress?
3. Does the company have audacious and stretched goals?
4. Does the company possess a cult-like culture?
5. Does the company develop its top management from internally?
Reference text:
- Built to Last by Jim Collins
- Good to Great by Jim Collins
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