Business strategy

02/09/2015

Thoughts on Researching Companies and Industries

Picture this. You walk into work one day and your boss mentions that an exciting opportunity has arisen that has come of out left field involving a company and industry that your organization is not that familiar with. You will be part of a conference later in the day and all participants are expected to be up to speed as much as possible with the firm and industry in question. In many instances, a key word search using an engine such as Google will give you the information that you need. However this is not always the case. As a result it is often useful to know a few sources of information. The websites of companies host a wealth of information but frequently when we want to understand the behavior of companies, we need to move beyond what the company has to say about itself. The following paragraphs offer some ideas about how to do this.

About Industries

Students may find useful information about companies, organizations, markets, and industries in a number of different online locations.

Biz.Yahoo http://biz.yahoo.com/ic/ and Reuters http://www.reuters.com/finance/global-market-data offer corporate profiles, overviews of industries, lists of companies competing in the same industry that in turn link to profiles, news related to specific industries and companies, financial data, tools for benchmarking financial performance, profiles of corporate executives and directors and information on ownership structures. Along with this, they often identify key regulators and professional and industry associations for each industry. Companies competing in Canadian industries can be found using the key search function found on Industry Canada’s http://www.ic.gc.ca/epic/site/ccc-rec.nsf/en/Home web site.

How might the most recent information about an industry or company be obtained? Why not try the keyword search capabilities of news aggregators found through Google (http://news.google.com) or Yahoo (http://news.yahoo.com).

A number of information sources do a very good job of offering clear descriptions of industries. High Beam Business http://business.highbeam.com/industry-reports, Plunkett Research http://www.plunkettresearch.com/, Value Line http://www.valueline.com/Stocks/Industries.aspx, Statista http://www.statista.com/topics/ and Franchise Help http://www.franchisehelp.com/industry-reports/industry-information/ are free sources but focus primarily on U.S or North American industry overviews and industry analysts. Examples of Porter Five Forces overviews of a dozen industries may be found in The Industry Handbook available from Investopedia http://www.investopedia.com/features/industryhandbook/. The overviews also include key ratios and terms for the industries being examined. Of interest as well is Hoovers. Although a pay service http://www.hoovers.com/industry-analysis/industry-directory/a-z.html, it offers a brief summary paragraph describing the competitive landscape of industries of interest. Global Edge, a creation of the Broad School of Business of Michigan State University, http://globaledge.msu.edu/global-insights is slightly different. It offers profiles of countries and global industries with a focus on risks, trends, events, and trade statistics. For risk profiles of countries for investors, one interesting source is the website of A.M. Best http://www3.ambest.com/ratings/cr/crisk.aspx.

The U.S. Bureau of Labor Statistics. http://www.bls.gov offers insight about industries from the perspective of occupations. At least one database from this government agency is important and it is the Occupational Outlook Handbook http://www.bls.gov/ooh/. What they do, work environment, pay, job outlook and reviews of similar jobs are among the topics covered for each of the 800 profiled occupations. The handbook also categorizes by occupation groups enabling analysis of similar or related jobs found in the same industry. The Bureau of Labor Statistics also offers a database labeled Industries at a Glance http://www.bls.gov/iag/tgs/iag211.htm.

Industry associations and government regulators are two other important sources of information. These will often describe the industry, offer insight into the key issues from the point of view of members or the government, and identify trends and policies. How are the industry players trying to change the competitive landscape? What issues do companies in the industry have in common? The American Society of Association Executives http://www.asaecenter.org/Community/Directories/associationsearch.cfm offers a link titled, Gateway to Associations which allows users to search for industry associations by keyword. Another source is Weddles Association Direct. http://www.weddles.com/associations/index.cfm. In Canada, of use is the Directory of Trade and Business hosted on the Industry Canada website. http://www.ic.gc.ca/eic/site/ccc_bt-rec_ec.nsf/eng/h_00001.html.

Regulators can help inform consumers and investors about specific concerns related to companies and their products and services. In the U.S., the Food and Drug Administration www.fda.gov handles issues related to food, drugs and cosmetics. The Consumer Product Safety Commission www.cpsc.gov deals with product recalls. The Environmental Protection Agency www.epa.gov focuses on the environment. For accounting or financial reporting transgressions, check out the SEC www.sec.gov Web site. In terms of a national body, there is no Canadian equivalent to the SEC. Health Canada and Environment Canada would serve as the equivalents in Canada to the FDA and the EPA.

Many observations can be made about industries and their make-up. If one wanted to map out some of the companies that could fit on the value chain of a regional industry, how might these companies be identified? For instance, if you were interested in identifying companies that made and distributed door handles or hammers? Depending on the ultimate market served these might be suppliers for some companies in the chain or manufacturers, wholesalers, distributors, service providers or customers for others. In Canada, you might have an interest in using the online trade directories such as the Canadian Trade Index, http://www.ctidirectory.com/, Frasers http://www.frasers.com and Thomas Net http://www.thomasnet.com. For the U.S. market, an example of a broad category trade directory is Manta http://www.manta.com/mb.

Where might one look for gossip or rumours about an industry or the public corporations found within that industry? Why not follow the online conversations in discussion forums found on sites such as The Motley Fool www.fool.com but do take the insights with a grain of salt.

As noted above, there are many different ways to look at an industry. One approach that is often overlooked is related to the patent profiles of industry competitors. Understanding patent activity can help analysts identify industry competitors, new technologies on the horizon, acquisition targets, companies with upward momentum, key researchers and key technologies driving new innovations among other things. The Canadian patent regulator, the Canadian Intellectual Property Office (CIP0) http://www.cipo.ic.gc.ca and its American counterpart, the U.S. Patent and Trademark Office (USPTO) http://www.uspto.gov have created databases that are relatively easy to search. The USPTO separates patent applications from assigned patents allowing searchers to understand where efforts are headed and who owns existing technologies respectively. For patent applications, focusing in on specific patent classes allows one to understand which companies might be in races to develop specific technologies or drugs. Patents summaries in the USPTO site are especially helpful for assigned patents. For each patent, the summaries list the patents that the inventor(s) have used to develop the invention as well as companies or assignees who have used this patent. This offers an important glimpse into who might be competitors or alliance partners as well as companies that might potentially form an ecosystem. Commercial sites such as Google Patents http://google.com/patents and Patent Genius http://www.patentgenius.com have simplified the task even further. Google has simplified the information displayed for each patent while Patent Genius allows easy searching by inventor name, industry and product/or technology and date foregoing the need to know the industry code or patent classification.

About Companies

Where might one find annual reports and business plans for publicly traded companies? If your interest is Canadian companies, then check out SEDAR www.sedar.com. If your interest is corporations whose shares trade on U.S. stock exchanges, then try the U.S. Securities and Exchange Commission (SEC) www.sec.gov web site.

By definition information about private companies is more difficult to access. Most private companies guard financial and competitive information closely. Learning about them thus presents a challenge to analysts. However, along with the company website and press releases there are a number of ways to gather information. One means is to use News Aggregators such as Google News http://news.google.com to scan the online media for insight. If the company is large, then another way to access insight is to examine the annual reports (10K) or business plans (S1) filed by publicly traded companies to the U.S. Securities Commission http://www.sec.gov that also happen to be competitors of the company in question. These annual reports and business plans will list risk factors and often competitors and key suppliers. They will often also describe the general business environment. Much of this information may apply equally to private sector competitors. Depending on the make-up of the financial statements for the publicly traded competitors, some of the ratios and margins may offer insight about the performance of the private firm.

For small and medium sized private enterprises, there are a number of databases that can help analysts understand their financial picture. Industry Canada offers access to Canadian Industry Statistics. It enables analysts to access information using a search tool labelled Statistical Data by Industry where industries are broken down by NAICS code http://www.ic.gc.ca/eic/site/cis-sic.nsf/eng/home?Open&src=mm2. In this instance Financial Performance Data for each industry lists average profitability, revenues and expenses. Industry Canada Financial Performance Data http://www.ic.gc.ca/eic/site/pp-pp.nsf/eng/home is a related tool that allows an analyst to create a report driven by NAICS code that provides industry average derived income statements, balance sheets and financial ratios for lower, mid and higher quartile performing companies. For U.S. firms, BizStats http://www.bizstats.com/industry-financials.php provides profit loss statements for a large number of industries organized by a corporation or sole proprietorship and size.

There are other interesting tools available for understanding business activity. World Freight Rates http://worldfreightrates.com/freight offer an interactive online tool to help gauge the costs of shipping goods via ocean, rail, air, truck or break bulk to locations around the world. Included in the calculations are commodity type, load type and whether the goods need to be refrigerated or are hazardous in nature. Spider Strategies http://www.spiderstrategies.com/kpi/ offers examples of industry key performance indicators (KPI) sorted by Department (HR, Finance, Marketing, Sales, I.T. and Customer Service) and by twenty different Industries. It suggests the use of these metrics when building company specific balanced scorecards. In other words, these lists of KPI help managers figure out what to measure when seeking to building successful companies.

About Company Culture

When exploring a company's culture, remember, rarely will a company say anything negative about its work environment. Companies seek to portray a positive image. Their espoused work culture will be communicated by a number of means including their mission, vision and value statements, their job ads and the speeches and presentations delivered by executives. If the company is publicly traded, this information should be found on their website. If a private company, some of it may be found there. If you are serious about trying to learn about a corporate culture, you will want to balance what is communicated by the company with other observations. The easiest way of doing so is to talk to a number of existing and former employees as well as consultants or government officials who have worked for or with the entity. Unfortunately, we are not always able to talk to these individuals and may be dependent upon secondary sources of information. If that is the case, there are other ways of getting a feel for a work environment and they include doing a key word search for stories using a news aggregator such as Google News, http://news.google.com reading company reviews in sources such as Glassdoor http://www.glassdoor.com/reviews/, or Career Bliss, http://www.careerbliss.com and exploring industry focused job profiles found in databases such as the Occupational Outlook Handbook of the U.S. Bureau of Labor Statistics http://www.bls.gov/ooh/. Description for occupations in an industry under the headings of “What they do”, “Work environment”, “Pay”, and “Job outlook” are often helpful allowing observers to understand what employees in the company do. This can be important. The behavior of individuals trained in a profession will be influenced by their training and the code of conduct of the profession. On the other hand minimum wage work environments can often be characterized by high turnover making it difficult for a company to instill a lasting culture in all areas of the company. Finally, some company work environments where a union is present, or where offices are located in different geographic regions, may be characterized by more than one work culture. Two other government sites worth considering are the Equal Opportunity Employment Commission http://www.eeoc.gov and the Occupational Safety Health Administration http://www.osha.gov . Both offers databases that can be searched by company name to discover workplace equity or safety violations. Researchers might also consider glancing at CSR Hub, http://www.csrhub.com which offers a searchable company and industry CSR (corporate social responsibility) and sustainability ratings and information database.

Along with Career Bliss http://www.careerbliss.com/salary/and Glassdoor http://www.glassdoor.ca/index, Simply Hired http://www.simplyhired.com/salaries.html is another site that offers insight into industry and company salaries.. World Salaries, http://www.worldsalaries.org hosts the International Average Salary Income Database, one that offers an international comparison of average salary for various professions, and an international comparison of average personal income & expenditure

An important influencer of corporate culture is the nation within which a business unit resides. It is reasonable to assume that for a Japanese company, the business culture permeating its head office in Osaka, Tokyo or Kyoto, may not perfectly carry over to its offices in England or Germany or Brazil. The same can be said for a company whose headquarters can be found in Houston, Texas. Despite the most sincere of efforts, its work environments in Calgary, Perth, and London may differ quite considerably, even with a shared common language.

Cultural dimensions of different countries, as highlighted by Dutch management scholar, Geert Hofstede, http://geert-hofstede.com/countries.html, national communications characteristics as developed by fellow Dutchman, Franz Trompenaars http://www.mindtools.com/pages/article/seven-dimensions.htm and country culture profiles created and made available to the public by the government of Canada http://www.intercultures.ca/cil-cai/countryinsights-apercuspays-eng.asp can quickly help an analyst understand differences in business cultures. These differences will need to be managed by any company seeking to develop shared understanding and practices among its workforce. Another excellent source of information are country reviews found on the website of World Business Culture http://www.worldbusinessculture.com/.

International Business Websites

Source	Website	Country Specifics
DFAIT	http//intercultures.ca	National Culture Profiles
Kwintessential	http://kwintessential.co.uk	National Culture
Geert Hofstede.com	http://www.geert-hofstede.com	Communication Styles
World Health Organization	http://www.who.int/countries/	Health
World Weather.org	http://www.worldweather.org	Weather
U.S. Energy Information Administration	http://www.eia.doe.gov/emeu/cabs/contents.html	National Energy profiles
Earth Trends	http://earthtrends.wri.org/	National Environment profiles
Funding Universe	http://www.fundinguniverse.com/company-histories/	Company Profiles and Histories
Population Reference Bureau	http://www.prb.org	National Demographic figures
Global Property Guide	http://www.globalpropertyguide.com	Global Real Estate
Prevention Web	http://www.preventionweb.net/english/countries/	Global Disaster Risks
World Mapper	http://www.worldmapper.org	Maps of the world by subject
U.S. Geological Survey	http://minerals.er.usgs.gov/minerals/pubs/country/	National Mineral profiles
Export Development Canada	http://www.edc.ca/search/CountryInformation.asp?slang=e	Country business profiles
U.S. State Department	http://www.state.gov/r/pa/ei/bgn/	Country Briefing Notes
WTO	http://www.doingbusiness.org	National Business Regulations – comparative
World Bank	http://info.worldbank.org/governance/wgi/index.aspx#home	World Bank sponsored governance indicators for countries around the world
Business and Human Rights Resource Centre	http://www.business-humanrights.org/Categories/	Issues by country, industry and company
Crocodyl	http://www.crocodyl.org/	Collaborative corporation watchdog information site. Company profiles and issues
Corporate Watch	http://www.corpwatch.org	Corporate Watchdog
Labour Net	http://www.labournet.org	Global labour network
Marketsize.com	http://www.marketsize.com	A small research company that reports on Market sizes of different industry. A pay service but with a free blog that offers that offer lots of examples of different industries.
Trading Economics	http://www.tradingeconomics.com/	Offers country level trade statistics
Global Edge	http://globaledge.msu.edu/Global-Insights	Business profiles of countries and global industries with a discussion of risks, trends, events, trade statistics, key companies
Coface Trading Safely	http://www.trading-safely.com/	Coface Country & Sector Risk Rating
Alexa.com	http://www.alexa.com	Tracks website traffic. Helps to sources for online advertising
Google Insight	www.google.com/trends	Tracks Google searches by geography. Enables target market identification
Internet World Statistics	http://www.internetworldstats.com/	Usage and population statistics
Net Market Share	http://www.netwmarketshare.com	Market share reports for internet technologies such as browsers, operating systems, search engines
Wayback Machine	http://www.archive.org/index.php	Internet Archive

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