Industry Analysis and Investment Decision

An investor must examine the industry in which a company operates because this can have a tremendous effect on its results, and even its existence. A company’s management may be superior, its balance sheet strong and its reputation enviable. However, the company may not have diversified and the industry within which it operates may be in a depression. This can result in a tremendous decline in revenues and even threaten the viability of the company.

The first step in industry analysis is to determine the cycle it is in, or the stage of maturity of the industry. All industries evolve through the following stages:

  1. The Entrepreneurial or Nascent Stage: At the first stage, the industry is new and it can take some time for it to properly establish itself.
Read the rest

Investment Decisions based on the Economic Cycle

Countries go through the business or economic cycle and the stage of the cycle at which a country has a direct impact both on industry and individual companies. It affects investment decisions, employment, demand and the profitability of companies. While some industries such as shipping or consumer durable goods are greatly affected by the business cycle, others such as the food or health industry are not affected to the same extent. This is because in regard to certain products consumers can postpone their purchase decisions, whereas in certain others they cannot.

The four stages of an economic cycle are:

  1. Depression: At the time of depression, demand is low and falling.
Read the rest

Case Study: Warren Buffet’s Investment Style

Warren Buffett is the only billionaire in history to amass his fortune entirely through shrewd investing. He started investing with ten thousand dollars earned from a paper route and went on to become one of the wealthiest people in the world. Today his worth is staggering $30 billion.

Warren Buffett was born on August 30, 1930 in Omaha, Nebraska. Since his early childhood, he has been fond of reading various kinds of investment books and The Wall Street Journal. He bought his first stock at age 11. He regretted later as he made delay in purchasing his first stock. At the age of 15, he had saved enough money to buy a 40 acre land from his father at Nebraska.… Read the rest

Case Study on Entrepreneurship: Bill Gates

Bill Gates was born in Seattle on October 28, 1955 to his parents, Mary and William Gates II.   He has two sisters. His father was a prominent Seattle lawyer, and his mother was a schoolteacher, University of Washington regent and chairwoman of United Way International. His great-grandfather was a state legislator and mayor, and his grandfather was the vice president of a national bank.

Bill strongly believes in hard work. He believes that if you are intelligent and know how to apply your intelligence, you can achieve anything. In school, he had an excellent record in mathematics and science. Still he was getting very bored in school and his parents knew it.… Read the rest

Case Study of Kishore Biyani: India’s Retail King

Kishore Biyani’s saga starts with his family business in textiles, which he joined after graduating in commerce. In 1987, Biyani launched the first branded ready-made trousers brand known as Pantaloon through his company Pantaloon Fashions. The trousers were marketed through the Pantaloon Shoppe stores. By the time Pantaloon Fashions went public in 1992, it had 60 exclusive shops. Later, he started manufacturing garments under two more brands-John Miller and Bare. Despite pod products and competitive pricing, the business seemed unviable due to high distribution costs and margins. Therefore, in August 1997, Biyani decided to open his own store at Kolkata to market these brands.… Read the rest

Case Study on Information Technology Management: Frito-Lay’s Long-Term IT Plan

Because the rate of technological change is so rapid, most people see IT through the narrow lens of short-term, silver-bullet solutions. IT vendors want you to believe that their important new technologies will blow away what has come before. You can’t blame a salesperson for trying to sell, or CIOs for having a queasy buy-or-lose feeling, but this attitude is precisely the opposite of the one companies should be taking. We would argue that because the winds of change affect IT more than any other area of the organization, IT benefits most from a long-term, disciplined, strategic view, and a square focus on achieving the company’s most fundamental goals.… Read the rest