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Key Postings IV: Business Analysis Foundations

O.K. we've finally combed back thru all the postings and followed up on the promise/threat to collect the various priors together. It turns out there's enough across a range of topics and domains that the "Business Analysis" tables will get split across three seperate posts. Here we're going to focus on the general approach to Enterprise Performance Analysis, specifically five major clusters - or continuing to beat our control system metaphor to death - consoles/dashboards:

1) Enterprise Performance: why it matters and the impact, including tables categorizing various headline companies into the good, the bad and the ugly as well as some interesting commentary from Carl Icahn.

 2) Financial Engineering: a key component of the last several years has been under-investment in hiring and capex and the largest investment in buybacks in decades. What's the impacts and implications for earnings outlooks ? And most especially - for long-term performance ?

3) Business Environment: businesses control what's inside their walls and must cope with the externals but, as should be very clear by now since it's the whole point of the dashboard argument, understanding how the wind, waves, and currents are setting is essential. 

4) Business Analysis: checklists, blueprints and frameworks along with associted readings and a guide to Warren Buffett's master class on business performance analysis. What are the elements, how do they work together, what should you be looking for and how do you go about looking. Tnink of these as performance blueprints and evaluation templates.

5) Functions and Issues: the enterprise consists of key fucntions like Customer Service, HR or Technology. From time-to-time we'll take a deep dive on a specific function or issue to understand what it is and how it should work vs generally does. Among other things this section includes some interesting work on HR and Innovation as well as Strategy. 

In the table below you can think of the postings detailed below as being the ones behind the left-hand column (sorry if there's some formatting problems - it's better after the break):

Industry and Business Analysis

General Business Analysis

Performance Framework

Industry/Company Analysis

Enterprise Performance Value

Overview and inventory of companies and issues

Financial Engineering

Issues

Buybacks, earnings, etc.

General Business Situation/Context

Risk factors, common fragilities, strategies

 

Framework and Blueprints

Performance assessment principles, readings & methods

Key Issues and/or Functions

Key operating functions (strategy, HR, innovation)

Home Depot Example

Multi-part series on a company as illustration and testbed

 

General Industry

Airline, Auto, Retail, Oil

Finance Industry

 

Technomedia-

tainment

Tech, Telecom,Media

Companies

Citi, Dell, Home Depot

 

 

 

Business Analysis Toolkit Part I: General Analysis

Topic

Posts

Comments

Enterprise Performance

Kaptain Karl Speaks: Performance, Executives & Outlook

Kaptain Karl's Test: an Icahn-like Inventory of Enterprise Performance

Weekly Reader 4Nov07: Business & Companies

 

Our core focus is on business performance, in context, because we think it is a central issue for the overall health of the economy, as investors and as employees and stakeholders. And we think that by and large there’s exemplars but a lot could do much better. As it happens Carl Icahn lays out his assessments of general business performance and executive competence in much…much stronger terms and motivates and supports our emphasis.

Earnings, Buybacks, and Implications

Winners & Loosers: Rubble Sorting

Market Drivers 3 (Buybacks):Investment, Hiring, Nah...Bonus, Bonus, Bonus !

Buybacks, Bounces and Splats: Buying High, Selling Low

Earnings, Valuations & Business Analysis(I): Readings

Business analysis is important for it’s own sake, especially if you’re tied to a particular one or industry. This post though defines the Econ/Ind/Business framework and shows the explicit links between understanding how a business works and investment analysis from our perspective.

And introduces and sustains a continued interest in the quality of earnings, which is poorer than generally realized, due to extensive and excessive buybacks.

Strategic Situation Assessments

WRFest 30Dec07(Business): Fragilities, Exposures & Soundness

Filterring the Non-Linearities: Sorting the Risk Factors

WRFest 23FEb08(Business Strategy): What the Future May Hold ?

On Being a Boiled Frog: the Strategic Outlook for US Industries

Another table which tries to collapse all the factors into one easy-to-read collection of critical things to think about. Again it’s holding up fairly well and playing out all to presciently. Some of this we wish would either turn around or be offset by some official brilliance !

These posts try to collective define, analyze and update the strategic context of key issues facing businesses that they must cope with.

Business Analysis

Think Like a Private Equity Guy ? No, Think Like An Owner !

Ganesh Filters III: Analyzing Businesses Blueprints

Masterclass: Buffett on Investing and Business Analysis

Readings (Earnings): The Real Earnings Realities that Ain't...YET

Earnings, Valuations & Business Analysis (II): Resources and Approaches

Performance Assessment Basics: Five Fundamental Factors

·          Business Performance II (Readings): Performance, Pain and Prospects

·          Business Performance III(Readings): Sad Stories, Good Stories & "Fixes"

General Business: Perspectives, Issues & Companies

ese posts are an introduction to comprehensive business analysis, hopefully strongly motivated by now. Starting with a basic set of rules, talking about l.t. value and return and then pointing to the strong resemblances between these rules and Warren Buffett’s approach (with a pointer to a great set of YouTube videos as a lagniappe). Those videos are a post-graduate course in both Business Analysis and how Warren really goes about it. And he’s far from as casual or simplistic as most people’s impressions might have. In fact he spends, or has spent, enormous effort accumulating over decades a deep and extensive understanding of many industries on their own terms.

The rest of the posts are continuous addon readings plus a running introduction to our framework and approach. If you want a blueprint or checklist the “Five Fundamental Factors” post is the place to start.

Key Business Issues and  Critical Functions

Earnings, Valuations & Business Analysis(I): Readings

Strategy, Context and Awareness: Sub-prime Lessons

Aholes, Shirkers and Performance: a Draft People Principles Policy http://tinyurl.com/2xqwtg

Sailing Into the Storm: From Execution to Innovation

These posts will walk you thru some of the major critical issues facing all companies and industries as well as provide some useful tools and readings for investigating them and staying on top of the issues. As a result of re-leveraging the general balance sheet situation of many firms exposes some fault lines which could be badly impacted by a downturn. At the same time there are bigger contextual issues in terms of market saturation and worldwide competition that faces everyone. Factors worth incorporating in any investment or other decision.

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