Understanding the Reit business model

THE key to a company's success lies in how well it executes its business model. This calls for optimising the allocation of limited resources to generate sustainable cash flows, investing in new products, technologies and services to respond to competitors and devising appropriate responses to changes in the macroeconomic, regulatory and political environment.

Different industries often require very different business models; and even within the same industry, the model that does add value to the business may vary somewhat from company to company.

To help retail investors undertake proper due diligence on a company, we have developed a framework of analysis to tease out whether: 1) the pertinent factors favour the firm in question; and 2) management is effective in executing its business model and strategies, and in responding to its external environment.