Business Risk Analysis
The rating analysis begins with an assessment of the company’s environment focusing on the strength of the industry prospects, pattern of business cycles as well as the competitive factors affecting the industry. The vulnerability to the industry to Government controls lations is assessed.
The nature of competition is different for different industries based on price product quality, product differentiation, service and so on. The industries characterised a steady growth in demand, ability to maintain margins without impairing future prospects, ability in the timing of capital outlays, and moderate capital intensity are in a stronger position.
When a company participates in more than one business, each segment is analysed separately. A truly diversified company does not have a single business segment that is dominant, and the company’s ability to manage diverse operations is a significant factor. As part of the industry analysis, key rating factors are identified into keys to success and areas of vulnerability. The main industry and business factors assessed include.