Sector & Strategy Division
At the Sector & Strategy Division, we are dedicated to providing in-depth analyses and valuable insights into various sectors and businesses. Our focus on value investing allows us to delve into the core of a company's business model and assess its potential for long-term value creation. Understanding a company's business model is crucial for both investors seeking profitable opportunities and employees looking to join forward-thinking organizations.
What do we do?
The following are some of the analyses we focus on when working on specific companies!
Business Model Analysis
Definition of a Business Model: A business model is the backbone of a company's profit-making plan. It encompasses the products or services the company intends to offer, its target market, and the projected expenses. For established businesses, regularly updating their business model is essential to keep pace with evolving trends and challenges. Business models not only aid investors in evaluating potential companies but also help employees comprehend the future direction of the organization they aspire to join.
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Why is it Relevant?
Understanding a business model is the foundation of strategic decision-making, competitiveness, and long-term business sustainability. When evaluating a company for investment, comprehending its business model is essential to gain insight into its revenue streams and growth potential. While a business model might not reveal everything about a company's prospects, it significantly enhances the understanding of its financial data.
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What is a Business Model Analysis?
A Business Model Analysis (BM Analysis) unravels how companies operate and create value through a well-defined set of activities for their stakeholders. Employing the Activity System (AS) perspective, we assess how value is generated by understanding the core activities of a company. BM Analysis enables us to compare and contrast different companies within the same industry, highlighting variations in their value creation and delivery processes.
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The Competitive System: The Model of Expanded Competition
The competitive system is the economic space populated by customers, suppliers, competitors, and substitutes. The Model of Expanded Competition (Porter's 5 Forces Model) helps analyze the forces that shape an industry's profitability and attractiveness. These forces include rivalry among competitors, bargaining power of suppliers, bargaining power of customers, threats of entry, and threats of substitution. Understanding these forces aids in identifying a company's position in the market and its room for maneuver.
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PEST Analysis
PEST Analysis is a management tool used to assess major external factors (Political, Economic, Social, Technological) influencing a company's operations and profitability. By evaluating these factors, companies can become more competitive and responsive to changes in the market. We conduct thorough PEST Analyses to identify opportunities and threats arising from external factors and assess their impact on businesses.
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Product-Market Matrix
To identify the businesses in which a company operates, we utilize the Product-Market Matrix. This matrix helps us identify similarities that characterize each product-market combination, revealing critical success factors, competitive dynamics, and cost structures. This analysis assists in determining whether a company operates as a mono-business or a multi-business enterprise.
Meet the Leaders of the Division
Meet the Leaders of the Sector and Strategy Division at Bocconi Students for Value Investing. Feel free to reach out with questions or to gain deeper insights into what our division encompasses!
Carlo Scarpetta
Head of the Division
Francesco Marchetti
Co-Head of the Division