Which are the Critical Business Drivers / Success factors of firms?

Well, each industry will have a specific set of factors that affects its profitability & its growth prospects. These few indicative examples which could help you in how to set your focus on what matters most.

Retail Sector, you must closely monitor footfalls & same store sales (SSS)
Banking, works on Net Interest Income (NII) or Net Interest Margin (NIM)
Telecom, its always Average Revenue Per User (ARPU)
Hotels, focus is on Average Room Tariffs & Occupancy levels.
On-line businesses, they are most dependent on internet penetration & changing habits of people on shopping.
Currency Market – Its critical for export oriented companies & import oriented oil companies. (Depreciating rupee against an appreciating Dollar – Will make the software companies most happy as it is export oriented, while Oil companies that relies on import will have to take the brunt – as it needs to pay in dollars for procuring Oil)

So this is exactly a reason – why i tell to all my clients – know/understand the industry you are investing. Buying a company’s share without having knowledge of these critical drivers could mean purchasing a potential loser. By judging a company based on these parameters – by looking at the annual reports – you can know where the company is headed & if you see a need to accumulate more stocks of this company or may be even sell it if you see slicing & dicing of quality.

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