Deciding on Investment or Career Change -10 Factors

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If one plans to make some long term investment in certain company’s stock or wants to make a serious career move, here is a checklist of few common  factors :

Factor 1 :Is it really difficult to replace company’s products ?

( examples :Google,Facebook, Nestle, 3M )

Factor 2: Is this business getting stronger or weaker ?

Is it growing ?

How long is the road (scalable)?

(example : pager business went down after the arrival of cellular phones ,similarly watch-makers & camera producers are struggling after these two features were added in mobile -phone)

Factor 3: What is the next level of this business ?

Is there enough opportunity in its current market ?

If yes , what company is doing to en-cash the rest of the market opportunity !

If no, what diversification plans are underway !

Factor 4 : Is the business differentiated ?

How company is different from others in same segment ?

Why customers would stick to it in long -run ?

What makes it better than competitors?

Example : Titan – trust on purity of its gold-offering

Factor 5 : Management Quality 

Whether management is capable enough !

Whether it is honest !

What is the management track record !

The key important parameters can be :

i)Passion ii) Integrity

iii) Capability iv) Scalability

Factor 6 : Debt on the books

Many a times companies go bankrupt as they bite more than what they can chew ! Interest costs kill them ! They take loan for mega-projects which have a long gestation period to give returns and when the project is ready the market disappears , leaving the company with huge leverage on its books !

Examples : Huge loan taken by power sector, real-estate  companies in last decade led to their failure in current decade.

Factor 7 : Regulatory Issues ?

Certain businesses get affected by regulatory related changes , their whole business model  need to change to follow new laws and rules and many a times ,many companies fail to change or the business -model is not flexible enough to change according to changing environment !

Example :Vodafone in India

Factor 8 : Agility 

Company having enough history to reflect how it handled difficult situations in the past !

Factor 9 : Focus on Innovation, Long Term Vision

Is company spending enough time & money to improvise its offerings !

Is company focusing on changing customer and market behaviour !

Factor 10 – Care for stake-holders

Does company go extra mile to serve its customers ?

Does company takes extra care of its employees ?

Does company take care of its minority share-holders ?

Is it transparent for everyone involved ?

 

 

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