Company and Industry Research

Hiromi Kubo, Thomas J. Ottaviano

• Publisher: Business Expert Press
• Year: 2016
• Print ISBN: 9781631570377
• eBook ISBN: 9781631570384
• Topic: Business
• Subtopic: Industrial Management
• Index: Business

The goal of this book is to describe information search strategies and techniques critical for business practitioners and to pinpoint credible sources of information on specific topics in company and industry research. In today's information age, businesses have an ever-growing need to obtain quality information in a timely manner and incorporate it effectively into decision making, and when such a need occurs business managers often face a situation of performing information research themselves with a limited budget. Rather than frantically running searches on random websites with much time wasted, it is imperative that they understand the nature of business information research, develop a systematic plan for data collection, and use appropriate information from credible sources. Learning and becoming familiar with the significance of these information resources is a key for successful business research.

CHAPTER 1

Introduction to Company and Industry Research

It is generally agreed that our modern society has experienced a major change in producing, disseminating, and accessing information as it has transitioned into today’s Information Age. A great deal of information is being generated every day, and many more facts and data are easily and quickly accessible to the public. Without question, the advent of the Internet and the overall growth of communication technology particularly in the past two decades have accelerated these changes, and this technological growth is expected to continue even more drastically in the near future. Furthermore, thanks to smartphones, tablets, and other ever-evolving mobile devices, the same information we enjoy obtaining at home is now available while we are on an airplane, at the beach, or overseas as long as an Internet connection is secured.

The Internet and the associated technology also have benefited information gatherers by reducing the cost of information and data. Some data sources that used to be expensive or accessible only at specific dedicated locations are now available on the Internet for much less or even free. Along with commercial entities, many authoritative information providers such as the U.S. government, which is the largest publisher in the world, have also been moving rapidly to make more and more content available over the Internet, making it easier than ever for the public to find and obtain information.

Although this phenomenon is enormously beneficial for information researchers, it also means that people must become skillful at weeding out unnecessary and inadequate information to get to the truth. Particularly in the business field, a company’s success relies heavily on the strategic use of information. Indeed, carefully cultivated, applied information is indispensable for successful business entities and a key to organizational effectiveness. This increasing emphasis on quality information necessitates greater development of research skills for business practitioners and those dealing with today’s business challenges. Therefore, it is to your advantage to become familiar with core information resources and the strategic mindset to conduct information research.

The information technology field is so dynamic and fast-changing that often what is right today might become obsolete tomorrow. It is therefore important for business practitioners to continuously explore the latest advances in the industry and keep up with the changing landscape. It is also worth noting that, although a great deal of information has been moved to the digital domain and much business-related research today can be done through the Internet, there are still significant amounts of information resources available only in certain formats or only for particular memberships, organizations, or through libraries. In addition, the phenomenon of information overload amplifies the serious issues of authenticity, credibility, and validity of information found on the Web. Once necessary information is collected and classified, it needs to be evaluated carefully for its appropriateness before being used in a particular decision-making context.

The demand for adequate business research skills has come with the trend toward increased size and complexity of the information available today. Considering the fact that one of the vital competitive factors for succeeding in business is speed, the abilities and strategies for accessing and gathering necessary business information in a timely and effective manner are crucial for those who want to prosper in their own business or advance in a company. The driving force behind this book is to assist these people to obtain such abilities by describing effective business research and introducing essential business resources.

Key Strategies for Effective Business Research

Generally, business research has the following characteristics that are distinct from other types of research:

    •   Problem-oriented. The goal of performing business research is to obtain the information and data necessary to solve a specific business problem, to make a sound decision, and to identify more profitable alternatives. The act of locating interesting information about potential customers or prospective markets is often exciting in itself, but the execution of such research is questionable if it does not contribute to improving problem-solving capabilities.

    •   Time-sensitive. Because business research tends to be done in a competitive, rapidly changing environment, the timeliness of information acquisition is critical. Business information must be provided on a timely basis to ensure that a company’s decision making is based on up-to-date information.

    •   Cost-effective. Business research can be extremely time consuming and expensive to conduct depending on what you are looking for and which resources you are lacking. Cost–benefit analysis must be applied when faced a situation of “making or buying” necessary information to maximize the company’s profit on investment.

Along with the above characteristics, business research consists of two distinct areas of research based on the methods of data gathering and types of information to be searched: One is called primary research and the other secondary research. Primary research is a research method to gather data and information directly from nonpublished sources of your own for your customized purpose. Conducting primary research can include questionnaires, surveys, interviews with individuals, focus groups, observations, and field tests. On the other hand, secondary research is to collect and analyze data that already has been produced and published by others for another purpose. It involves gathering already compiled data, studies, reports, and other information from organizations such as government agencies, trade associations, and research entities, and putting them together for analysis. While primary research is often conducted for consumer analysis and product development, secondary research is utilized for a wide variety of purposes such as to analyze target industry segments, identify major players and competitors within an industry, establish benchmarks, and so forth. This book is dedicated to discussing and describing secondary research with a particular focus on company and industry research.

New business practitioners who gather information under pressure with limited time and resources might take shortcuts that can end up backfiring later. The following strategies will help you avoid common pitfalls and allow you to get the most out of your research.

    •   Determine what information to collect and why. The value of information collected often depends on the preparation and planning that take place prior to the execution of information gathering. Too frequently, business research is carried out without careful consideration being given to what information needs to be collected and why it is worth being collected. The purpose of conducting business research is to solve a problem that a company faces at hand and to make informed decisions. Therefore, identifying what information and data you need for solving a problem is the first and foremost step in business research. Without investing time to adequately understand the problem to be solved, the research can become challenging and will often fail to accomplish its purpose. To avoid such a pitfall, start by articulating exactly what problem you want to solve, brainstorm the information that you might want to gather to solve the problem, and list potential resources that could help you locate the necessary information.

    •   Develop a research plan and record the research process. Planning a research project involves assessing problems to be solved, preparing for the allocation of available resources, identifying strategies and techniques to be employed in information gathering, and specifying approaches to analyze the gathered information. A well-developed, systematic research plan not only provides a guidepost for the research project that is to be conducted but also becomes a means of communicating to others the validity of the research.

            Once the planning phase is completed and the research begins, it is strongly recommended to keep track of the research process while business research is conducted. Developing a habit of taking notes will help you when you return later to search for more information. Always record your research steps, resources of information, terms used for keyword searches, and other key factors of your research using your preferred notetaking system.

    •   Seek reliable information tenaciously. Performing business research is time consuming and often requires patience. Those who are new to systematically conducting business research tend to quit searching for reliable data once a small piece of related information is found and easily dismiss the idea of spending the time to carry on with extensive research. Using only one resource could leave you in a tight spot when authenticity of the information source is somehow shaky. Do not stop your research quest simply because it is too much work. Keep going down the list of potential resources until you find trustful information or you recognize a need of altering the original research plan. Keep in mind that all work you do on the foundation of inadequate information can cause a total waste of your time and money.

    •   Ask research experts. If a research decision critical to your business requires complicated research or if you get overwhelmed with complex research tools beyond your experience, do not hesitate to contact business research experts and get help from them. Besides professional researchers, consultants, and statisticians, excellent help can be found at public and academic libraries. In particular, colleges and universities that offer business graduate programs generally have business librarians whose job is dedicated to help with diverse business-related research. They will be happy to lend their expertise to you and point your research in the right direction.

    •   Analyze what you found before making decisions. Once the research is completed and sufficient information is acquired, it is important to carefully examine the quality of all of the gathered information and use selected information to make a decision. Although the criteria for evaluating information will vary depending on the nature of the research, the primary factors that you should be concerned with are authority (e.g., Who produced the information and is it of trustworthy origin?), credibility (e.g., Is the information free from errors and biases?), timeliness (e.g., When was the information produced?), purpose (e.g., Why was the information originally produced and published?), and relevance (e.g., What is the significance of the information for my business needs?).

Keep in mind the strategies discussed in this section when you undertake any kind of business research. The further you get into your business, the more likely it is that you will need specific detailed information to meet your particular needs. Although such information can sometimes be difficult to locate, there are many more reliable resources than you could possibly imagine. Some of the most powerful research tools, both free and fee-based, are listed in this book.

CHAPTER 2

Company Research

Quick List of Resources for Company Research

1) Corporate Profiles, Reports, and Analysis

Hoover’s

Mergent Online

Mergent Intellect

ReferenceUSA

Thomson ONE

Business Insights: Essentials

LexisNexis Academic

Morningstar Investment Research Center

Standard & Poor’s Capital IQ

MarketLine

Value Line Investment Survey

ESG Manager

SEC-EDGAR

Free Web Resources

2) Company Financials

Almanac of Business and Industrial Financial Ratios

RMA Annual Statement Studies

Key Considerations When Researching a Company

Unsurprisingly, how you approach company research will differ based on the type of company you are looking at and the type of information about the company that you are interested in. Although there are resources that compile profiles, financials, news, analyses, and much more for a one-stop-shop experience, there are also more specialized resources that focus on one type of information and do so in great detail. Regardless of the type of resource you are using to research companies, there are a few concepts that are critical to understand so that you know what information should be available for the company, what information likely is unavailable for the company, and how reliable the available information is.

Public Versus Private Companies

The first, most fundamental question to consider when starting company research is, “Is the company public or private?” This question will ultimately determine how much information is available about the company. Stated simply, any member of the general public can own a portion of a public company. This ownership is divided into shares, which can be freely traded, usually on a stock exchange. This is significant because U.S. regulations state that any company that is publicly traded (as well as private companies with more than 500 owners and more than $10 million in assets) must submit informational filings to the Securities and Exchange Commission (SEC). These filings include information related to a company’s finances, organizational structure, executives, company history, subsidiaries, and much more. There are dozens of filings, some required periodically and some required situationally, each of which have different information available to the public. The most commonly referred to of these filings are the Annual Report (10-K) and the Quarterly Report (10-Q).

In the 10-K alone, companies are required to report on risk factors, legal proceedings, finances, corporate governance, executive compensation, stock ownership of certain executives, and much more. Submission directions for the annual report can be found through the SEC website at www.sec.gov/about/forms/form10-k.pdf.

Companies are required to submit these filings because any member of the general public interested in owning part of a company has a right to know what they are purchasing ownership in. These corporate filings are the basis for a huge portion of the information available about public companies. What is more, because public companies are traded on stock exchanges, and thus have the potential to make or lose investors a whole lot of money, analysts and news outlets have a tendency to focus a lot of their attention on publicly traded companies. This serves to greatly amplify the differences in the amount of information available about the two types of companies.

Private companies on the other hand are not open to the general public. By extension, they are not governed by the same SEC regulations (including requirements to submit corporate filings) as public companies. Since they are not required to submit filings to the SEC, they usually do not. Because they are not traded on exchanges, they tend to garner less interest from analysts and news outlets. This all leads to far less information that is available about the company.

Another type of company to be aware of is a subsidiary. A subsidiary is a company that is controlled by a “parent” or “holding” company. For example, Pixar Animation Studios is a subsidiary to its parent company, The Walt Disney Company. The Walt Disney Company happens to be a public company, but what does that mean for the information available about Pixar Animation Studios? Well, when a public company submits its filings, it does so for the entire company. In other words, most of the information will be a broad-level overview, encompassing The Walt Disney Company and all of its operating subsidiaries. They are not required to break down the costs, revenues, or other details of the individual subsidiary companies. The parent company might do so, but as a researcher, you should not expect to find that level of detail. Because of this, researching a subsidiary (like Pixar) has more in common...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Preface
• Acknowledgmentsxi
• Chapter 1 Introduction to Company and Industry Research
• Chapter 2 Company Research
• Chapter 3 Industry Research
• Chapter 4 Further Resources for Business Research
• Chapter 5 Business Plans
• Index