Q&A∣Is it possible to have an overall grasp of a certain industry in only one week? How?

By Christine Tsui

Translated by Rachel Wang

 

I believe it is achievable as long as appropriate research methods and resources are used.

Most of people could only put up with several prevalent methods, which makes most reports are virtually the same without any inspiring ideas. So I would like to share some effective but not widespread methods here.

1. Reading the financial reports of the listed companies.

The reports from the financial agencies and consulting institutions are mostly second-hand information, accessible not only to you but also to others. Actually, if you tend to learn about a certain industry, you should gain an overall view from the classification and analysis on the financial reports of the top ten firms in this industry. The report by management teams and the core financing data are the worthiest part to compare and analyze. The management reports normally contain the following parts:

* In the performance of the last year, what business area does the company achieve a lot in? What are the challenges? And where the challenges come from?

*What is the general situation of the industry? What is the trend?

*What measures would the company take to deal with the challenges and the problems?

*The core data of sales, COGS, gross margin, operating expenses and cost breakdown, the number of stores(retail performance), regional performance, product category (brands) performance, and the increase or decrease from last year and the major reason are worthy to be aware of. For an retail company, the stock is also critical, including stock-to-sales ratio, and inventory turnovers etc.

*Other financing data: debt, cash flow conditions, etc.

*The management structure deserves your attention as well.

The introduction of management (board of directors) structures and members are normally attached in the end of the financial reports, which is also crucial to learn about the industry information and make judgment of the trend. For instance, the education and career backgrounds of the management indicate a lot. If the management consists of mainly family members or school fellows, it can be easily estimated that the managing style would be the family-owned one.

2.Taking interview with experts is common to be mentioned, while few of people would suggest inviting a stranger to answer your professional questions online.

The app ZaiHang is indeed an approach to the experts, but what if you do not have much budget for that? You can write letters. However, many youngsters are not familiar with the rules of letters. Some people may have similar experiences to me, being reluctant to answer the piles of emails without clear appellations, self-introductions and even the aim of the email (with uneducated language), the sender seemingly not to knowing how to write a correct letter or email.

The expert here means the observers and insiders of the industry, staff in the upstream and downstream firms and even the separated employees.

3.Observation

Observation proves effective, especially in the retail industry. You can intensify the perceptual knowledge of this area by observing the deliberately selected representative firms or places with the passenger flow, entering rate, rate of bags, per customer transaction, monthly sales, and service or performance of clerk in the stores.

4.Research on the internet

It is widely known that internet is a giant information base. Nevertheless, the quality of the information is not uniform, so the key to online research is to distinguish the valuable from the waste.

*The reliability of the information sources

We all know that publishing house can be a guarantee of the quality publication. Each industry usually has its own certain publishing houses. For example, I would only read the economic books published by economic press, like social sciences press, instead of ones by literature and art press. So it is same to the We-Media. The professional level of the author of We-Media should be highlighted when you go for information. In general, I prefer the printed sources, for the reporters and editors are more professional than the ones online.

*The background of authors

Actually, vague background information is not my preference, for instance, “years of working experience in a certain fortune top 500”, or “a senior executive of an international prestigious brand”. But what is the firm on earth? What brand? Position? If it is not appropriate to indicate the present position, the previous career routine should be given, or I, as a reader, would doubt the reality of the background.

* Cross check of information

If you get any information from a news agency, you can check other sources whether they have mentioned the same issue. If nothing can prove the reality of the information you have, you should doubt what the original source of that information is or whether it comes from an independent investigation. Dealing with the significant details, you should trace the first-hand information.

*Logical reasoning

Much data from the industry analysis is concluded from logical reasoning of the writers. Without definite correct standards in the business field, the basic logic of business is essential among the various data.

If a company claims the number of its stores and the gross sale of a year, you can calculate the income of each store, comparing the results and with the average level with the same distribution channels and store area. In fact, many media reports data with misunderstandings, for some journalists do not comprehend the business logic, so they only to write whatever other people say.

5.In addition to the professional consultancy and securities reports mentioned above, some professional academic websites are also very worthy of attention.

Such as CNKI( Chinese National Knowledge Infrastructure), the biggest e-library in China, has a collection of national newspapers, magazines, periodicals and papers(not all in high quality though) etc, so you can search the information you want conveniently, and at least much more reliable from most We-Medias. If English is not an obstacle for you, you can search some academic database of English materials, which, however, may demand certifications. Besides, some local libraries are free to access.

6.Appropriate research methods

In the terms of methods, I recommend the contextual analysis and text analysis. (Both of them are qualitative analyses, and quantitative analysis methods have been widespread.) They are quite hard to acquire. But if you master them, it would be useful to analysis information and make you a truly outstanding consultant. For myself, I could perceive what others ignore in reading through this method.

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