In the years that I have been working with companies in identifying and implementing supply chain and value chain improvments, I have watched how strategies change based on the prevailing economic conditions. In good times, when companies are struggling to meet demand and respond to market growth, successful companies invest to improve their operations, improve their margins, and increase their revenue. In bad times, when facing recession and business slowdown, successful companies invest to improve their operations, reduce their costs, and protect their margins. The constant drive to improve performance does not change - what may change is priorities.
I was reminded, recently, that a change in market conditions may require a fresh look at your business. Whether you have years of experience as an executive, you are a new manager or analyst, or you are a consultant / technology provider, sometimes you need to start from scratch. Businesses have proven, for years, that an outside perspective (consultant, research firm, partner) may challenge internal assumptions and lead to dramatic business change.
I thought it may be useful to provide a description of how I have "gotten started" when I have looked at companies and organizations for the first time. (I will be writing this in several installments). I supsect that most of this will be a pretty basic roadmap and I apologize to the more experienced among you. For the IT and sales account managers, the roadmap is essentially equivalent to a basic method for requirements definition or "discovery."
The approach that I will be outlining is based on a top-down approach.
Step One - Collecting Business Information
Unless you are a very small business, the odds are you provide more than one product (good or service) to your customers. In the case of the mid-to large company, the chances are that you have multiple businesses which each have multiple products. The first thing I try to do is get a sense of the company / organization and how it performs in the marketplace.
At the most basic level, what I would like to have is a description of the company, what products it provides, who the customers are, what it is trying to do in the markeplace, who its competitors are, and how it is performing. Not much, is it?
In the last 10 years, the freely available and accessible information has exploded. I typically start with an internet search. Here is how I frequently start:
Visit the company's website. Normally the company will provide a description of its goods and services, press releases, and information they want the public to know. (Not surprisingly, it is not uncommon that even senior executives are not aware of everything that is posted on their website).
On the websites of publicly traded companies, there is frequently a link for investors or investors relations. The information that you can find at these sites varies widely but frequently you can find:
- Annual Reports
- Quarterly Reports
- Other SEC (US Security and Exchange Commission) filings
- Analyst Briefings
The first three items on the list form a basic starting list of information whether you are doing a value chain performance analysis or a financial analysis. The United States Security and Exchange Commission (SEC) has simplified finding much of this information since it is available through EDGAR (Electronic Data Gathering, Analysis, and Retrieval of SEC filings).
A company's annual report contains two important financial statements: the balance sheet and the profit and loss statement. Additionally, the annual report typically provides management's view of the business, vision and broad plans for the future, assessment of the marketplace, and their identification of operational and financial risks.
For large businesses, the financial reports will usually identify major business segements and the markets in which they operate. Since this business segmentation helps in determining the scope of the value chain, it is important for the novice analyst to understand that how the business slices and dices its organization and rolls up financial reports may or may not reveal important details of the organization. (If you randomly select public companies and visit their websites or read their annual reports you will find that quite a bit of variation in how much detail they reveal about their organizations. Some of this is a result of trying to concisely report the general health of enormous organizations. Some, is simply a result of trying to safeguard competitiveness).
Check public business resources. There are countless resources for buying business intelligence. Before you spend your money, I would recommend starting with some free or virtually free resources.
I use all of these resources when I start - each for different reasons. This doesn't mean that there aren't more places to start your investigation. They may be (The Reuters site provides some of the most complete company overview / descriptions. The Businessweek site provides very good information on competitors and industries). Information access may very based on whether or not you subscribe to a periodical.
Businessweek
CNN Money (Fortune, Money)
Forbes
Reuters
Yahoo Finance
Subscription Services. When starting a value chain analysis for a medium or large company, it is frequently useful to see more detail regarding the organization of a company. Where are products manufactured, where are the warehouses, where is the sales organization, etc. That level of detail is very difficult to get from public sources. A relatively low-cost research option that I have used in the past is Hoover's, a research arm of Dun and Bradstreet. Hoover's has a "family tree" option that often provides substantially more information that is publicly available.
It is possible to purchase individual research reports for businesses. Obviously, due diligence is required to insure that you are buying information you can't get with a little of searching and the cost of the report can be in the hundreds or thousands of dollars.
Company Information. Whether you are an analyst, an executive, vendor/consultant, or an IT organization, once you have started working with a company it is useful to gather internal information (not typically publicly available) for initial reference. The information should include:
- Organization Charts
- Mission Statements
- Strategic (Long-Term Plans) and Business Plans
This assemblage of information should provide a basis of understanding of the company's markets, product lines, geographies, customers, and basic performance.
This first "quick look" of a company should only require a few days. You may spend more time in subsequent phases of analysis or implementation in getting more detailed information, testing assumptions, and answering questions.
In a perfect world, benchmarking information would be available to support this part of the analysis. In my next entry, I will spend a little time discussing benchmarking and participation in benchmarking programs.
