Comparative Analysis

Making Comparative Business Analysis Features that Rock

Basically there are two types of comparisons in business world: between different businesses and decisions. Let’s call them external and internal analysis.

External Comparative Analysis

Business Decisions need to be comparable in order to support decision making processes and management decisions. Comparable in dimensions and facts (in IT language) or to say in performance indicators (in non IT language). Most common way to compare different business is to prepare benchmarking analysis and to compare different companies across same industry or even across different industries. Quality of benchmarking definitions and ratios will determine quality of comparative analysis same as way of implementation in measured companies.

Other way to make comparative business analysis is to use standard financial statements for economic evaluation or performance indicators/methods like balance scorecards, EVA, and etc.

Internal Analysis – Decision Comparison

Every start of internal comparative decision analysis should be with knowledge about own input data. There is no better place to start but financial statements as start for business evaluation. Is there any future and vision of company should be foreseen and presented in official planning data.
Main feeds of business analysis are key performance indicators – financial and business.

So, this are input data as start of internal decision comparison. This is also the output of comparative analysis, same reports and same known information environment but with modified figures.

Input data need to be processed before comparison is made and processing needs to be made with following features:

• Analysis should hold transparency otherwise different scenarios will not be comparable, because comparison would be impossible and results could easily mislead
• Any additional new factor like launch of new product, marketing product, service, technology and etc.,  is a factor of modification upon basic input data
• Each result of decision analysis should show positive and negative contribution in financial statements.

With this features implemented in applications or models for comparisons it would more than easy to compare possible decisions outcomes and then to choose most valuable decision.