Company analysis is the process that evaluates securities by collecting all the information related to the company’s profile, products and services along with the profitability. Company analysis is also popularly referred to as “fundamental analysis”.  A company analysis utilizes basic information about the company, such as the mission statement and apparition along with the company’s values and goals. While company analysis is underway, investors also consider the company’s history. They especially focus on events that have played a critical role in shaping the company. A company analysis also observes the company’s goods and services on offer. In case the firm carries out manufacturing activities, company analysis also conducts a study on the company’s products while analyzing the quality of the products as well as their demand in the market. In case the company is a service provider, the investor carefully analyses the services offered by the firm. Let’s find out more about company analysis.

Company Analysis: What is it and why is it important?

What is Company Analysis?

A company analysis is an extremely useful technique that objectively evaluates the performance of a given company. The accurate picture provided by company analysis helps:

• Sales and marketing teams with improving their pitch and finding the right people in the organization for it.
• Investors make informed investment decisions
• Business leaders find out opportunities for improvement and find out where they stand in relation to their competition.

At its core, company analysis does the job of providing insight into a firm’s activities, competitions, goals and performance. Based on the expected outcome, it might contain extra information that helps answer the questions of the intended audience. 

What are the different parameters of Company Analysis?

Business offerings

The main objective of company analysis is to find out what the company does. These days, a company’s website usually carries that information. However, clever marketing language can make this information slightly clear as the firm’s marketers try their best to distinguish their firm from their peers. So to get this part right, you need to identify the customer needs the company fulfills and the category the firm works in by taking a closer look at their products/services and marketing materials.

Industry analysis

This part does the job of supplying the context of the firm’s operation. While the depth of this analysis can vary depending on the expected goals, it generally involves a detailed study of the industry’s maturity, competition, trends, growth drivers and challenges. In case deeper insights are desired, the following types of analysis can be conducted. These reveal where the company fits in the bigger picture.

Competitive forces analysis

This type of analysis evaluates threats from new market entrants, substitutes, and the bargaining power held by buyers and suppliers

PEST analysis

This factors in the political, economic, social, and technological aspects impacting an industry

SWOT analysis

This analyses the strengths, weaknesses, opportunities, and threats in an industry

Strategic initiatives

Every company has a specific set of business goals it aims to achieve. Gaining an understanding of its route and the gaps along the path is critical. It doesn’t matter if they are partnerships, mergers and acquisitions, new market entry or product/service-line expansion, it’s imperative to consider them in order to help improve decision making. 

Timely information about such advancements can be extracted from press releases, company announcements, articles featured in the media, and thought-leadership content.

Technological capabilities

Technology enables businesses to work more effectively and drives differentiation. It’s a critical yardstick of how well the firm can tackle future challenges and opportunities that the industry presents. So we can clearly see that evaluation of a firm’s technology is a key factor of company analysis.

Analyzing a company’s technological capabilities involves collating information about the company’s existing technical abilities, the ones in development and how they stack up relative to its peer group. This insight can be obtained by looking into the company’s investments, M&A, patents, hiring, and earnings.

Organizational chart

Organizational charts uncover how responsibilities are distributed across an organization. When They are used for the purpose of investment, they reveal whether the firm’s structure is geared towards making it a success. Sales and marketing teams utilize organizational charts in order to identify and cultivate their relationships with different decision-makers.

Organizational charts also offer a very holistic view of all the management profiles, detailing the overall professional experience inside the firm and outside it. They also include educational qualifications, and achievements. This helps investors evaluate every single decision maker of the firm and offers them insight into the firm’s credibility and position in the industry.

In order to acquire relevant data for the creation of effective organizational charts, company analysts should peruse company websites, LinkedIn pages, press releases, company announcements, and paid and public business directories. 

Key competitors

No company’s analysis can ever be complete without analysing and studying the competitors. As far as investors are concerned, looking at the major competitors in each line of the company’s business helps them determine how big the market base for the product is. It allows investors to make a balanced decision depending on the company’s performance on key metrics.

As far as sales and marketing teams are concerned, it’s always critical to find out what works well for the competitors. It helps them discover and work towards filling the gaps for their prospects, enabling effective customer acquisition and retention strategies. A holistic company analysis goes a long way in helping end users acquire great insights into the business. 

Company analysis: Frequently Asked Questions (FAQs)

What’s the difference between company analysis and business analysis?

Company analysis gives the performance of a particular company. It covers all the facets of business in which the company is engaged and its performance across all the segments it’s engaged in. Business analysis on the other hand, examines a particular business in which the company is engaged and compares its performance with other companies engaged in a similar kind of business.

What is Company Analysis?

Company analysis is the process that helps investors evaluate securities, a company’s profile, profitability and its products and services to find out if the company is worth their investment.

What are the factors of company analysis?

The factors that have an impact on company analysis can be divided into two segments, quantitative factors and qualitative factors. Qualitative factors are business models, competitive advantage, Management and corporate governance. Quantitative factors deal with company growth and industry growth along with its peers.

Company analysis: Conclusion

Company Analysis is the process of evaluating a company’s profitability, profile, product and services. In order to get an accurate idea of the firm that the investor wants to invest in, company analysis is very important. While conducting company analysis, ratios should always be covered in a comparative manner, especially when compared to previous performances or other players in the industry. Understanding the level of the company’s management is also very critical. Investors must know if these people were involved in any kind of fraudulent activities in the past. Cash Flow Statements provide a thorough picture of the Cash balance which arises from the company’s operating, investing and financing activities. While conducting company analysis, it’s important to be mindful of both qualitative and quantitative factors. That’s the only way to gain a deep and insightful understanding of the firm.