Monday, October 14, 2013

What does it mean by "understanding a business"

Well, the porter 5 forces does help in understanding a business.

I realized there is no end to these 5 forces.

Take for example, I am looking at Steel Stockists recently.

Just the competitors have taken me 3 days of number digging.

Their suppliers are steel millers, what affect the steel miller? What is the supplier of steel millers? Iron ore miners. How  does this whole vertical chain of business affect the company.

Then there is management quality, what have they been doing, what are their products. How much do you understand their products. I just spent a night reading up on the different grades of stainless steel and their classification. What are the external business outlook that will affect their margins? Who are the customers, what are the customers' customers? What will make the customers increase capex and hence increase ordering. How well can management of companies predict these orders and replenish inventory at decent price. How does company manage price volatility?

I have wanted to blog about my research after I concluded my findings, but then I realised it will most probably take weeks at least.

So maybe a teaser, here. Good things are worth waiting for.

1 comment:

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