From Good to Great

[premfan]

I'm working on creating a case study list of companies that made the transition from being good to great. I havent read the jim collins book and dont care too cause thats his research. I feel the best way to refine your investment approach is to reverse engineer companies and see if you can see a pattern currently taking place. My case study companies making the turn to becoming great via leveraging a product.

 

The year of the turn :

 

Deckers corp 2003

 

apple 2005

 

ceradyne 2002

 

Monster beverage ( the artist formerly known as hansens natural) early 2000's

 

 

Patterns

 

- Company earning below average roe 0-10 then a jump in roe due to new demand for product. Apple via ipod, ceradyne via body armor due to war, monster beverage due to energy drink, deckers corp due to uggs. This jump in roe last at least one business cycle. The bigger the market the longer high roe trend.

 

-  Depending on the cause of demand this trend lasts at least one business cycle (4-5 years). Ceradyne was great from 2002-2008 then demand dropped

 

- Towards the end of the trend companies go parabolic.

 

 

 

Questions:

 

How is demand created? Via some external event or due to societies free choice. External event via war or gov buying money.

 

Has competitive advantage been reached ? 1.) customer loves product    2.) economies of scale    3.)  proprietary technology

 

What are the barriers to entry?

 

Current list of good to great :

 

Coinstar year of the turn 2010

 

 

Watch and see list

 

Rim ( needs a couple years of pain first probadly one business cycle)

 

 

Anyone know additional companies to case study that went from good to great via a product in the past or ones that have already started the turn recently ?

 

 

[vinod1]

I cannot recommend enough "The Halo Effect" before you undertake this effort. It helps you to avoid many errors that you might otherwise make.

 

Vinod