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Peer group analysis
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Peer group analysis is the practice of comparing a firm's results to those of similar companies or competitors. Peer Group Analysis Performing in-depth peer analysis is essential to investment research and market positioning. Whether for competitive analysis (questioning what is our primary competition doing? Are their results better than ours? If so, why?) or investment selection, identification of the company’s true peers is fundamental. In the scope of today’s business world, a company’s business strategy is incomplete until it is well aware of its competition. In a 3-step approach, an organization can provide its clients with relevant information about their true peer groups. 1. Creation of custom peer groups Identification of relevant companies by specific criteria, such as industry/across industry, lines of business, having similar sized portfolios, geography (local, regional, national, international), size of business (e. g. in terms of revenue), performance criteria, etc. Providing a brief overview of the industry in which the companies operates, the entry-exit parameters, intensity of competition in the industry, key players, market mechanisms etc. 2. Analysing the peers Definition of the relevant criteria for the comparison of the peers (e. g. financial ratios, key performance indicators of the business, set-up of business model, business strategy, technology employed) with the client Comparison across selected criteria for peer group companies Ranking of companies and identification of best practice areas, helping the client stay well ahead of the competition by being aware of their business challenges, challengers and processes 3. Learning from the best Deduction of key learnings for the clients business and strategy Compilation of a list of specific measures as quick wins and long term measures See Also
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