Companies Exist Inside Business Networks
Nova Devices makes phones. Apex Chips sells it processors, and ClearLens sells it cameras. When Nova has news, others feel it.
Why this matters for beginners
News spreads through business links. This is general education, not personal advice.
Main explanation
Apex Chips earns 40 percent of its revenue from Nova Devices. ClearLens earns 10 percent.
If Nova cuts production, Apex is far more exposed than ClearLens, simply because more of its sales depend on Nova.
Customers, suppliers and competitors form a network. News at one company can change expectations for others.
Exposure is a starting point: margins, other customers and contracts still matter.
Example using a real company
Nova Devices cuts its phone plan. Apex (40 percent exposure) falls more than ClearLens (10 percent).
- →High customer concentration: large sensitivity.
- →Small exposure: smaller sensitivity.
Common beginner mistakes
- ✕Treating every linked company as equally affected.
- ✕Ignoring how much revenue depends on one customer.
Key terms
- Customer concentration
- How much revenue comes from a few customers.
- Supply chain
- The chain of companies that make and deliver a product.
Key takeaways
- 01News spreads through business links.
- 02Bigger exposure usually means bigger sensitivity.
- 03Exposure is a clue, not a full answer.
Check yourself
- 01Which is more exposed to Nova: Apex (40 percent) or ClearLens (10 percent)?
- 02Name three types of business link.
- 03Does 40 percent exposure tell you the exact profit impact?
- 04Why can one company's news move another's stock?
Try the concept on a real company
Open a company in the Analyzer and ask which of these mechanics could explain its recent price moves.
Educational examples only. Not buy or sell recommendations.