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How Competitive
Intelligence Helps Businesses to Read Between the
Lines
by Edwin Bailey, managing director of
Piribo.com and ReportBuyer.com, online business
intelligence for industry
One of the reasons why the executives of U.S. energy group
Enron were regarded as “The Smartest Guys in the Room” was because
they were able to manipulate their accounting to keep the
share price inflated. They created a raft of special
purpose vehicles (SPVs) and, by carefully staying within
statutory ownership percentage levels, did not have to declare
them in their consolidated accounts. Only when they
slipped up on one of them did the whole network start to
unravel.
In his new book, Competitive Intelligence,
Christopher Murphy points out how such “off balance sheet”
finance was an element in many corporate debacles, and he
provides a guide to unpicking an annual report. It shows
how to read between the lines of the facts and figures in the
balance sheet, the profit and loss account, and—perhaps most
important of all—the cash flow statement.
This book explains the technical mechanisms that some
companies offer in their accounts and which professional
analysts use and provides advice on how to assess what the
figures tell about where a business and might be going.
Corporate crime writer Michael Ridpath explains in the
book’s introduction that: “In business you cannot
operate effectively unless you know what everyone else is
doing.” Competitive Intelligence
demonstrates that it isn’t just a matter of facts and figures,
but the strategy and motivations of your competitors, as well
as your customers, that matter. You have to look at all the
factors that make a market what it is today, and the factors
that will indicate how it is likely to develop in the future.
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