Question

For the following decisions, indicate whether they are examples of a bottom-up analysis or a top-down analysis:

Replacing the printing press at a newspaper A newspaper's decision to sell all its print services and move into online data services A pharmaceutical company's research investment in developing a cholesterol drug A car company's research investment in developing a cholesterol drug Your decision to take an English literature elective rather than a sociology elective this semester Your decision to do a degree in business rather than medicine

Answer 1

Top Down Analysis examines economic factors to see hoe they affect our economy, certain industries and ultimately individual stocks within those industries. On the other side, Bottom-up Analysis focuses less on market conditions. It focus on how an individual company in a sector is performing compared to specific companies in the sector.

1. Replacing a printing press in a newspaper is a Bottom-up Approach as it focuses on individual company and have no relation with market condition.

2. Newspaper's decision to sell all its print services and move into online data services is a Top Down Approach as it focuses more on macroeconomic condition.

3. A pharmaceutical company's research investment in developing a cholesterol drug is a Bottom-up Approach as it is a individual decision and the company is already involved into the drug business.

4. A car company's research investment in developing a cholesterol drug is a Top Down Approach as company move towards a new business which will affect the economy.

5. Your decision to take an English literature elective rather than a sociology elective this semester is a Bottom-up Approach as it is an individual decision not affecting the economy.

6. Your decision to do a degree in business rather than medicine is a Top Down Approach as this decision is influenced by the economic conditions.