Beta- Analyzing mutual funds

Guru Prasad -
 The risk of any investment made always depends on the volatility in the following investment. If we can have a factor that could tell us about the volatility of a investment and help us judge our risk and corelate it with our capability to take risk, how would that be? Well Beta factor is one such factor that could help us know the sensitivity of our stock or portfolio fund that we have chosen to invest. Beta ratio:- Understanding Beta:-  Beta is a metric used in fundamental analysis to determine the volatility of a stock with comparison to the overall market that has a fixed beta ratio of 1 always. Stocks or funds that are ranked with a beta ratio above 1 generally tend to fluctuate more and hence give access to more risk but yielding higher returns too at the same time if gone in favour. While the risk is slightly less in the funds with beta ratio below 1 they give less but yet stable return on investments generally. Hence, the beta factor can be said as a risk- reward factor, helpi
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Transformation in Business

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 In stock market we often prefer investing in companies with stable growth and significant high profit yielding companies. People seem to trust these companies on along term basis and trust the capabilities of the company to improve. But, in today's fast moving world what really makes these companies long lasting and trustable. It is their capability to adapt with the fast moving technology and changing demand of the people. Life or business, change is the rule of the world and in this world only the fittest survives, even in business. Hence transformation in companies is a very important criteria for choosing any company for any kind off investment on a long term prospect. 



Business transformation is a change in management strategy which can be defined as any shift, realignment or fundamental change in business operations.The vision is to cop with the requirement of the demands of the business. This transformation could be at many levels(especially in a large cap company), such as the HR level, team level, board of directory level or at the level of the promoters and stake holders of the company.

Well now let us look into the types of transformation:-

  • Operational transformation:- This focuses mainly on coping with the changing technology. While most of the companies with good cash flow continuously aim at adapting with every new technology and adapting with the best quality machines even at the production level, this has become petty common.
  • Core or Strategic transformation:- While this is also a important transformation required in the business structure most companies get hit here and fail to change their vision or focus on the various kinds of products and marketing strategies. Though this sounds pretty weird but it is actually true and understanding this transformation as a investor is always one of the most biggest task for long term benefit.
  • Organizational transformation:- Altering resource allocation is key to many transformations, and a company’s most precious resource—its people—are no exception. Organizational transformation is based on assessing both how various departments are staffed, and the structure of those departments themselves.
  • Management transformation:- As companies strive for growth in competitive marketplaces, top-down bureaucratic hierarchies aren’t always the best for facilitating rapid decision-making and reacting to new developments. Transforming the management structure may be part of the solution (getting rid of the middlemen, etc.), but empowering individuals to make decisions themselves or quickly reach to a high level authority is far more important to bring in transparency in the organization. To bring this transparency it requires socialization and access to information, establishing clear communication channels.
  • Cultural Transformation:- Cultural transformation is in some ways the hardest business transformation activity. Corporate cultures tend to evolve organically, driven by the personalities of leadership, and how people are rewarded and recognized. Changing the culture usually takes much longer than any other type of transformation, in part even in the personality of a human being because it’s harder to translate concepts and intentions into action and practice. Hence it is completely legitimate to accept that not all companies are capable of such changes. But recognizing such changes in a company and identifying them could always give a great scope to every investor in the company.
While some transformations in cultural or strategic aspect could aim at long term results and benefits and could be a little time taking, it is also true that many initiatives that once took five or six years to complete are now being implemented in a year or less, many organizations now need to manage mountains of information, compressed time frames, and countless decisions that affect nearly all aspects of strategy and operations. The risk of failure is great, but companies that can pull the disparate elements into alignment can achieve bold objectives, now and into the future. 

In light of the potential risks, aligning all of the elements to get business transformation “right” requires more than an A-to-B road map. It requires an integrated approach linking business strategy to transformation ambition to executional discipline in order to unlock breakthrough value. It all starts with a strategy—without clear, big picture objectives and plans on how to get there, any business transformation is destined to fail. This strategy must also be very clear to downstream individuals to make sure nothing is lost in translation, as a business transformation’s steps and processes shouldn’t be left open to interpretation.

Some examples of transformations:-

The Covid-19 pandemic has accelerated digital transformation in India, according to a new study by customer service software firm Zendesk. More than half the companies surveyed said their digital transformation had been fast-tracked by one to three years while 72% said customer experience (CX) had become more important to them now than a year ago.

Walmart becomes the third-largest IT spender in the entire world. Walmart has gained some fame when it comes to telling digital transformation success stories. There’s hardly an article on the topic that doesn’t mention them, and there’s a reason for that. In fact, the numbers speak for themselves, during 2018 fiscal year, Walmart spent a total of 11.7 billion in technology investment, which made it the third-largest IT spender in the entire world behind Amazon and Alphabet.

Sephora blends digital and in-store shopping experiences Sephora’s digital strategy merges the digital and physical shopping and unites them for the common good of the shoppers. Sephora was one of the first in beauty retail to understand how to leverage data to drive a more customer-centered experience. Sephora started with personalized email campaigns sending out behaviorally-targeted communications. It’s recorded that the new campaigns led to a 80% higher open rate. When they discovered that customers often use their personal smartphones to search independent product reviews or recommendations while in the physical store, Sephora developed a mobile app designed to emulate the knowledge of a personal shopping assistant. The client can scan the product using the Sephora app for ratings and reviews but also for looking up past purchases, viewing her wish list or managing gift and loyalty cards.



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