Business Analysis: How To Analyze Any Business

Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

CourseFourWeekMBA Business Model Innovation Flagship Course

A quick intro to the Business Analysis framework

On FourWeekMBA I’ve looked at hundreds of business models of companies from high-tech industries (Alphabet’s Google, Amazon, Facebook, Apple, and Microsoft) to more traditional industries, like luxury empires (LVMH, Kering Group, Tiffany, Brunello Cucinelli, Prada) and more.

I’ve analyzed from listed, public companies, for which data can be found in financial statements to small businesses for which data is not publicly available.

As I received this question over and over again, I thought to show a simple framework to analyze any business. For the sake of this framework, we’ll leverage on business analysis to reverse engineer a business to either help it grow or to gather insights that can help us grow our own company.

Keep in mind the business analysis requires a good amount of creativity, and while a single framework is a good starting point, you will need to use your experience, understanding of the industry and what is available out there to draw a picture of what you’re looking at.

In short, I think an effective approach to business analysis is that of the artist, rather than the scientist.

Thus, while we’ll be using a few data points to understand a business, we want to keep our minds able to connect the dots in several areas to draw a picture that unlocks strategic insights that we can test.

For the sake of providing a framework as a starting point to analyze any sort of business, you’ll need to answer a few simple questions, each addressing a key element of the business.

We’ll tackle it by looking at three main competitive advantage a business can create over time:

Core moat:

  • What’s the key asset? (core asset)

Market moat:

  • Who’s the key stakeholder? (stakeholder profiling)
  • What player is competing for the same customer? (context mapping)
  • What’s the key touchpoint between the brand and the customer? (core distribution)

Financial moat:

  • How does it make money? (revenue generation)
  • Where’s the real cash? (cash generation)
  • How does the company spend money? (cost structure)

Let’s analyze each of those elements to uncover and draw the picture of any business. We’ll start from the outer layer (the financial moat, to get to the core asset.

Financial moat

In the. financial moat stage we’ll answer:

  • How does it make money? (revenue generation)
  • Where’s the real cash? (cash generation)
  • How does the company spend money? (cost structure)

The purpose of the financial moat is to follow the money to dig deeper into the business and move toward what gives it a real market advantage, and eventually, we’ll look for the business core asset.

How does it make money?

Revenue streams are important as a baseline to understand any business. Following the money can be very powerful in business as it unlocks a set of questions that will help us drill down into the current picture but also to draw some possible conclusions about future operations and strategy.

For instance, if you look at Google revenue streams it’s interesting to notice a few things right away:

Google primarily makes money via its advertising network that in 2017 generated 86% of its revenues. Then, the other side of the business – almost 13% of its revenues in 2017 – comprised money from the Apps, in-app purchases, and digital content in the Google Play store, Google Cloud offering and Hardware products. The remaining part is attributable to Google’s “other bets” a set of risky businesses Google is betting on. 
  • The company still primarily makes money from advertising
  • Google revenue streams are diversified (even though advertising is still the primary revenue stream)
  • A very small percentage of Google’s revenues come from other bets

From those simple statements, we can drill further down and look at each revenue stream:

  • Advertising revenues: Google makes money by two primary mechanisms: Google Ads and Google AdSense
  • Other revenues: that comprises things like in-app revenues, but also hardware devices which Google sells
  • Other bets: it comprises investments in other ventures

From this first look, we can depart from looking at other bets and other revenues. Not because those are not important for the future. Quite the opposite, one of the hidden gems of Google’s success in the next ten, twenty years might hide there.

But here we’re not trying to predict the future, which is impossible. We want to reverse engineer the current business to gather some insights which will help us drive our own strategy now (for instance, if you’re building a business today by gaining organic traffic from Google understanding its logic helps a lot!).

Therefore, we’ll decide to drill down more

Why? We want to uncover where the real cash is.

Where’s the real cash?

When asking “where’s the real cash?” we’re not talking about cash flows, but rather about margins. In short, for companies like Netflix which run cash negative business models, it would be misleading to ask where’s the cash.

Instead, we want to look at the part of the business that has high-profit margins. For instance, if we look at Google’s advertising machine we can notice a few things:

Google generated over $116 billion from advertising revenues in 2018, which represented 85% of its total revenues. Of those revenues over 70% came from traffic via Google’s main properties (Google search engine, YouTube, Gmail, and others). Google’s main properties are monetized primarily via a cost-per-click mechanism. Network members’ sites are primarily monetized on a cost-per-impression basis. Google also spent over $26 billion in 2018 to sustain its traffic on both its properties and as a revenue-share mechanism with its network members (AdSense and AdMob).

To build a cash cow the company might do the following:

  • Give up part of the margins on a line of business to strengthen another more strategic and scalable part of the business (think of how Google splits revenues with network members thus giving up a good chunk of margins, yet by making its search pages way more valuable for users, and advertisers)
  • Build a freemium part of the business which while doesn’t get monetized it helps amplify the brand and to build a valuable core asset monetized asymmetrically (we’ll see what that means)

How does the company spend money?

The cost structure is one of the building blocks of a business model. It represents how companies spend most of their resources to keep generating demand for their products and services. The cost structure together with revenue streams, help assess the operational scalability of an organization.

How the company spends its money informs about how it’s investing back into strengthening its core asset, thus building future growth.

TAC stands for traffic acquisition costs, and that is the rate to which Google has to spend resources on the percentage of its revenues to acquire traffic. Indeed, the TAC Rate shows Google’s percentage of revenues spent toward acquiring traffic toward its pages, and it points out the traffic Google acquires from its network members. In 2017 Google recorded a TAC rate on Network Members of 71.9% while the Google Properties TAX Rate was 11.6%. 

Market moat

At this stage we’ll ask:

  • Who’s the key stakeholder? (stakeholder profiling)
  • What player is competing for the same customer? (context mapping)
  • What’s the key touchpoint between the brand and the customer? (core distribution)

The objective here is to understand what creates a competitive market advantage and point us toward the core asset of the company, which makes the business sustainable in the long-term.

Who’s the key stakeholder?

If you look at a companies’ like Amazon the complexity of the business goes well beyond a regular company. In short, at this stage, it’s important to highlight the difference between small businesses which are more linear in how they approach customers.

And platform business models that instead have a more complex value chain.

Linear business models create value by selling products down the supply chain. Platform business models create value by enabling exchanges among consumers.

We could make this process harder and harder by finding more business types, classifying them in B2B, B2C, B2B2C and more. Or we can take a simpler approach.

Who’s the key user/customer and what’s the value provided to her?

Amazon Value Proposition
A company like Amazon has multiple value propositions, as it serves several target customers in different markets. With its mission “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online and endeavors to offer its customers the lowest possible prices,” Amazon value propositions range from “Easy to read on the go” for a device like Kindle, to “sell better, sell more” to its marketplace.

In Amazon’s case, for instance, the company has multiple products and each of them has a different value proposition. Therefore, focusing on them all would be a mistake, as we want to go back and reconsider.

Who’s the Amazon repeat customer?

The customer who goes back to the Amazon e-commerce platform to buy over and over again is the key customer and where the company has built its success.

When you do look at the customer from that perspective, you stop assuming that Amazon Prime is another revenue stream, and instead, you understand that besides that, that is a way for Amazon to lock-in loyal customers and make their repeat purchases convenient (Prime Customers won’t pay for delivery).

The same happens if you go back and ask a similar question for a company like Google.

Who’s the person that drives up the value of the most important company’s asset?

If you look at Google’s business model it’s easy to get fooled:


You might assume that as Google makes money by selling advertising to businesses, it will be the advertiser who pays Google to be the most valuable customer.

Yet, in Google’s case, the most valuable customer is the one who doesn’t pay: its users

Google’s mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”

That is because Google runs an asymmetric model. In short, the company won’t monetize directly its users, but it will monetize the core asset which is built on top of the free users’ attention.

In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Where free users provide valuable data to Google’s algorithms, the company matches its technology with the users’ data and sells part of that as paid adverting.

In short, in an asymmetric model user and customers are not the same.

In a more symmetric model instead, users and customers are the same stakeholders. The customer wearing the hat of the user provides valuable data to the platform. The company refines that data through proprietary algorithms and as a result, it gives back a valuable service to its customers.

That is how the Netflix business model works.

In those cases when the user is what provides valuable data to the core asset of the company, it’s important to understand that the tech company will prioritize its strategy around the user over time.

What player is competing for the same customer?

Once found the key stakeholder, the person who helps the company build its most valuable asset, we can zoom out a bit and understand the context in which the company operates.

A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis, it is possible to understand the competitive landscape of the target organization.

One way to find comparable companies to map out the context is to look for those organizations that match the business and financial profile.

We do that because there is no company operating in a vacuum. And even when a company which is better suited to help customers get things done might dominate.

In many other circumstances, better distribution strategy, capital moats, and more effective business models can help companies dominate beyond the value provided by their core products.

That’s why context matters.

In Google’s case we’ll look at the other players which are also grabbing the attention of users around the globe:

According to eMarketer, in the US alone, digital advertising spending will be around $129 billion. Within this market, the most significant players are companies like Google ($116 billion in 2018 from search advertising), Facebook (over $55 billion in advertising revenues in 2018), Amazon (over $10 billion in 2018 from product advertising), Twitter (with $2.6 billion in advertising in 2018), and Microsoft’s Bing (search advertising for about $7 billion in 2018)

An attention-based model usually follows an asymmetric monetization strategy. Therefore, given Google’s key stakeholder (its users), and the fact that it’s an attention-based model, we can understand right away what products/platforms in the marketplace are comparable:

  • Google (Alphabet)
  • YouTube (Alphabet)
  • Facebook
  • Instagram (Facebook)
  • Bing (Microsoft)
  • Twitter
  • TikTok (ByteDance)
  • DuckDuckGo
  • Amazon

Therefore, in order for Google to keep its competitive advantage is important to keep an eye on these.

*Note: The reason why Amazon is on the list as its website is one of the most important product search engines, intercepting the commercial intents of billions of people in the western world.

What’s the key touchpoint between the brand and the customer?

While disruptive startups built their name and grabbed market shares quickly by breaking down the trade-off between value and cost (at the basis of a blue ocean strategy) there is another component of the success of any organization which can’t be ignored: distribution.

Distribution is the key touchpoint that makes customers connect with a brand, that enables companies to monetize their core assets and that enables them to keep tight long-term control over their business.

The importance of a distribution strategy can’t be overstated. Distribution isn’t just about delivering a product in the hands of the key customer that is also about:

  • Enabling the company to be perceived inline with its pricing strategy and the brand’s identity
  • Building up the habits that enable users/customers to become champion of the product (just like you can’t stop using Google)
  • Build competitive moats

Core moat

Finally, at the stage, we can identify the core asset and put all together.

What’s the key asset?

Alphabet’s Google key asset, its search results page, which for over two decades helped Google become a trillion-dollar company!

The key asset is the main property that enables the company to make money in the long run.

For a tech business like Google that is represented by its search results pages, which endowed by users’ data and algorithms make them extremely valuable to advertisers.

If we think of a smaller business or a non-tech company that can be represented by its premises or its brand.

For instance, for a small Boutique hotel, its location is the key asset. For a luxury company, its brand is the most important asset.

The former is physical and easily identifiable. The latter is instead non-physical and abstract, yet still extremely valuable as it enables companies like Prada, LVMH, Tiffany and other luxury brands to capture high margins.

Therefore depending on the company, the main asset might be the technology, data or brand. Or better yet a mixture of those things.

Putting it all together

As we identified the core asset, the market moat, and the financial moat, we can move backward to uncover the whole story.

In a case like Google, the company makes its money primarily by monetizing its search results pages (core asset).

It runs an asymmetric business model where the user and the customer are not the same (stakeholder profiling). Products and platforms like Amazon, Facebook and Twitter also draw the attention of users (context mapping), however, Google has a strong distribution network given for instance by the fact the company can cover the whole users’ journey (core distribution), and most of its money is spent to maintain its core asset competitive (cost structure), while advertisers provide revenues and cash to the company which makes it financially sustainable (financial moat).

Where do you find the data?

A set of useful resources to find the data you need to analyze several businesses are:

  • EDGAR Filings
  • Crunchbase
  • Owler
  • SimilarWeb
  • LinkedIn

It’s important to remark that when it comes to data it’s not important how many data points you find. Often it requires a bit of creativity to ponder the right question.

In that case, a single data point can tell you a lot about a business that you can use to assess the company or to drive the strategy for your own business.

FourWeekMBA business analysis framework summarized

To analyze any business you can ask a few simple questions:

  • Who’s the key stakeholder? (stakeholder profiling)
  • What player is competing for the same customer? (context mapping)
  • What’s the key touchpoint between the brand and the customer? (core distribution)
  • How does it make money? (revenue generation)
  • Where’s the real cash? (cash generation)
  • How does the company spend money? (cost structure)
  • How does it make money? (revenue generation)
  • Where’s the real cash? (cash generation)
  • How does the company spend money? (cost structure)

Each of those questions will lead to an understanding of the several blocks that make up internal and external strategic forces that shape the business.

Case study: how to make of an everyday free tool your go to BI alternative

While it’s tempting to complex things up when performing business analysis, in reality, there is a simple tool, that you have been using for years, which can help you to perform a good part of your analysis: Google.

As pointed out on the Google blog in 2012:

Search is a lot about discovery—the basic human need to learn and broaden your horizons. But searching still requires a lot of hard work by you, the user. So today I’m really excited to launch the Knowledge Graph, which will help you discover new information quickly and easily.

…The Knowledge Graph enables you to search for things, people or places that Google knows about—landmarks, celebrities, cities, sports teams, buildings, geographical features, movies, celestial objects, works of art and more—and instantly get information that’s relevant to your query. This is a critical first step towards building the next generation of search, which taps into the collective intelligence of the web and understands the world a bit more like people do.

…the Knowledge Graph can help you make some unexpected discoveries. You might learn a new fact or new connection that prompts a whole new line of inquiry. Do you know where Matt Groening, the creator of the Simpsons (one of my all-time favorite shows), got the idea for Homer, Marge and Lisa’s names? It’s a bit of a surprise:

In 2012, Google started to roll out officially its Knowledge Graph (though its attempt to make the search experience even smarter and more semantic started way back and it escalated when the company acquired MetaWeb).

With that, Google started do develop more and more features related to giving beyond the classic ten blue links we have seen for years.

Those features we see appearing more and more on search results are coming from the massive Google’s semantic database made of billions of data points called Knowledge Graph.

Within the Knowledge Graph, Google combined semantic knowledge, to billions of users’ preferences and data, refined by its powerful algorithms and refined by its human raters.

This massive knowledge base is there to be explored, for free, it only requires you to be aware of it.

Industry analysis and set up

To start using your free BI tool by performing a simple search like “Amazon” you will see how Google will suggest on the search results a set of entities, or defined things in the Google Knowledge Graph. This matters because those entities draw data from Google Knowledge Graph which is a combination of things that Google’s algorithms learned over the years, as the data coming from billions of users each day. In short, you have a powerhouse at your disposal to start up your analysis.

When searching for “Amazon” on Google, at the bottom of the page (from desktop) you will find several suggestions from Google, based on the industries where Amazon operates.

In short, Google is suggesting that Amazon primarily operates as an online retailer, and as such it compares it with other retailers (online and offline). Yet Google’s Knowledge Graph also expands on that and tells you more.

Amazon is also an AI company competing against other AI companies which offers you an interesting insight into the products of the company.

At the same time, Google is suggesting that Amazon is also a key player in the cloud space, thus it offers you some perspectives of how the cloud industry looks like by pointing out some direct competitors (like Microsoft and Oracle) and other companies operating in the cloud space.

How the Google Knowledge Graph expands your search by providing interesting insights and a quick overview of companies that might make sense to comprise in your analysis. This is extremely useful to speed up the set up of your analysis.

Expand the research

From there you can drill down in each of the carousels you see showing on Google to have a more detailed overview and expand the research. You can stretch it as far as you want, depending on the scope of the analysis.

Example of how you can differentiate among physical retailers and department stores by looking at “related search.” This is a great feature as it enables you to see how in the mind consumers ho a brand is potentially perceived. So what they look also for when looking for the same brand.
You can also drill down in each category, suck as “AI companies” and navigate within the carousel to find out all the potential companies in the space, thus expanding you analysis.
You can do the same with “cloud companies”

Discover new data points

As example, when you drill further down and you search for “cloud companies” at the bottom fo the search result page you will find other categories of companies part of the cloud industry.

From PaaS to IaaS models all born as part of the cloud industry.

Expand the search to find out more and figure out new models from PaaS to IaaS and more.

Key takeaway

When performing an analysis, try to ask a difficult question like “what’s the single data point (or data points) that can tell me a lot about the company I’m researching?”

While it’s easy to look for the ultimate business intelligence tools when performing an analysis, in reality, it makes sense to stop for a second and think what might be the single data points that can give you insights about a company.

From there you can use explorative tools, like Google to find out and drill down to draft an analysis that can give you different insights and enable you to reverse engineer many large companies.

FourWeekMBA Business Toolbox

Business Engineering


Tech Business Model Template

A tech business model is made of four main components: value model (value propositions, missionvision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Web3 Business Model Template

A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Asymmetric Business Models

In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Business Competition

In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Transitional Business Models

A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

Minimum Viable Audience

The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Business Scaling

Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Market Expansion Theory

The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.



Asymmetric Betting


Growth Matrix

In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Revenue Streams Matrix

In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Revenue Modeling

Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Pricing Strategies

A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

FourWeekMBA resources used to draw the framework:

Business model case studies:

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