What is SWOT Analysis

 A technique that enables organisations or individual to move from

everyday problems and traditional strategies to a fresh
prospective.
 SWOT analysis looks at your strengths and weaknesses, and the
opportunities and threats your business faces. SWOT can help
your company face its greatest challenges and find its most
promising new markets.
 The SWOT Analysis framework is a very important and useful tool
to use in marketing Management and other business applications
 A clear understanding of SWOT is required for business majors.

Basic Elements of SWOT Analysis

Strengths (internal, positive factors)
• Characteristics of the business or individual that give it an
advantage over others in the industry.

• Positive tangible and intangible attributes, internal to an

organization or individual.

• Beneficial aspects of the organization or the capabilities of an

organization, process capabilities, financial resources, products and
services, customer goodwill and brand loyalty.

• Examples - Abundant financial resources, Well-known brand name,

Lower costs [raw materials or processes], Superior management
talent, Better marketing skills, Good distribution skills, committed
employees.

Weaknesses (internal, negative factors)

• Characteristics that place the firm or individual at a disadvantage
relative to others.

• Detract the organization from its ability to attain the core goal and
influence its growth.

• Weaknesses are the factors which do not meet the standards we

feel they should meet. However, weaknesses are controllable. They
must be minimized and eliminated.

• Examples - Limited financial resources Very narrow product line,

Limited distribution, higher costs, Weak market image, Poor marketing
skills, Limited management skills, Under-trained employees.
Opportunities
• Are external attractive factors that represent reasons your business
is likely to prosper.

• Chances to make greater profits in the environment - External

attractive factors that represent the reason for an organization to
exist & develop.

• Arise when an organization can take benefit of conditions in its

environment to plan and execute strategies that enable it to become
more profitable.

• Organization should be careful and recognize the opportunities and

grasp them whenever they arise.

• Examples - Rapid market growth, Rival firms are complacent,

changing customer needs/tastes, new uses for product discovered,
Economic boom, Government deregulation, Sales decline for a
substitute product.

Threats (external, negative factors)

• External elements in the environment that could cause trouble for
the business - External factors, beyond an organization’s control.

• Arise when conditions in external environment jeopardize the

reliability and profitability of the organization’s business.

• Examples - Entry of foreign competitors, Introduction of new

substitute products, Product life cycle in decline, changing customer
needs/tastes, Rival firms adopt new strategies, increased
government regulation, Economic downturn.
Some basic terms for every new
investor
1.Return on Investment: - Return on Investment, or ROI,
refers to how much you’ll earn (or expect to earn) as a
percentage of your investment. So if you’re investing
$100, and you get back $110 (a $10 profit), your ROI is
10%. Generally, you hope to get a higher ROI on a riskier
investment.

2.Cash: - Everyone knows that cash refers to bills, coins and

other kinds of currency. When financial advisors talk about
moving some of your portfolio, or investments, into cash,
they don’t mean you should hang on to a bunch of dollar
bills or other type of currency. Instead, they are usually
referring to liquid investments, or investment vehicles that
are easily swapped for cash, like certificates of deposit
(CDs), Treasury bills or money market accounts.

3. Portfolio: - A portfolio is a collection of investments owned

by the same person or company. An individual typically
builds his or her portfolio with different kinds of company
stocks or different types of investments, such as stocks,
bonds and mutual funds.

4. Asset Allocation: - This refers to your plan, or strategy for

your investments. You could put all of your money in a single
investment, like buying stock in one company — but you
could lose out big-time if it doesn’t do well. Instead, you
could try to balance your risk by investing among several
 companies. That way, if one goes down, another may still go
up. Some financial advisors go even further by suggesting
that you put your money in different classes, or types of
investments, like cash, bonds or stocks.

5. Bonds and Stocks: - Bonds are where you loan money to

an entity – usually a company or a government body – in
exchange for a promise that they will pay you interest on
your money. Bonds are a little riskier than cash
investments but will usually pay more interest than a bank
savings account. Stocks are basically an ownership interest
in a company. So, if a company does well, the price of the
stock will probably rise, and the company may even pay
dividends to stockholders. However, nothing is guaranteed,
and you can lose part or all of your initial investment if a
company doesn’t perform well.

6. Risk Tolerance: The reward for taking on a riskier

investment may be a higher return — or not, depending on
the performance of that investment over time. As you
invest, you need to understand your own tolerance for risk.
Then you have a high risk tolerance. If you would rather take
a safer investing path, then your risk tolerance is lower.
Sometimes, it depends on where you are in the investment
lifecycle.

7. Mutual Fund: - This is when a group of investors gets

together to buy assets like stocks and bonds. A mutual fund
does all the legwork of bringing investors together and
diversifying assets. A mutual fund may hold hundreds or
more of stocks or other financial instruments, reducing the
possibility of loss from any one investment. Professional
 money managers typically make the investment and selling
decisions.

8.Securities and Equities: - Securities refer to different types

of investments, such as stocks, bonds and mutual funds.
Equities refer specifically to stocks, or shares in a company.

9.Price-to-earnings Ratio: - The P/E ratio, as it’s often called,

refers to a company’s stock price as a percentage of its per-
share earnings. A low P/E is usually 0 to 10 (a company that
earns $1 a share and has a $10 per share stock price has a
P/E ratio of 10), and might be a signal that the company isn’t
doing too well. A high P/E ratio, above 25, could mean that
investors expect the company to do really well in the future.
It’s important to note that a low P/E could also mean that
investors haven’t realized the company’s potential for
growth, while a high P/E could mean that people are over-
valuing the company because they think it’s worth more
than it actually is. In times like that, a stock price might be in
danger of plummeting, and thus causing investors to lose
money.

10. Prospectus: - When it comes to investing, research is

really important. It provides details about the expenses,
finances and other important company info. A prospectus is
a description and should be considered one tool in stock
picking — it is not a guarantee of results.
Some basic terms while trading in
Financial Market

Market Order
A market order is an order to buy or sell a stock at the best available
price. Generally, this type of order will be executed immediately.
However, the price at which a market order will be executed is not
guaranteed. It is
Important for investors to remember that the last-traded price is not
necessarily the price at which a market order will be executed. In
fast-moving markets, the price at which a market order will execute
often deviates from the last-traded price or “real time” quote.

Example: An investor places a market order to buy 1000 shares of XYZ stock
when the best offer price is $3.00 per share. If other orders are executed
first, the investor’s market order may be executed at a higher price.

Limit Order
A limit order is an order to buy or sell a stock at a specific price or
better. A buy limit order can only be executed at the limit price or
lower, and a sell limit order can only be executed at the limit price or
higher. A limit order is not guaranteed to execute. A limit order can only
be filled if the stock’s market price reaches the limit price. While limit
orders do not guarantee execution, they help ensure that an investor
does not pay more than a pre- determined price for a stock.

Example: An investor wants to purchase shares of ABC stock for no more

than $10. The investor could place a limit order for this amount that will
only execute if the price of ABC stock is $10 or lower.
Stop Order
A stop order, also referred to as a stop-loss order, is an order to buy or
sell a stock once the price of the stock reaches a specified price, known
as the stop price. When the stop price is reached, a stop order
becomes a market order. A buy stop order is entered at a stop price
above the current market price. Investors generally use a buy stop
order to limit a loss or to protect a profit on a stock that they have sold
short. A sell stop order is entered at a stop price below the current
market price. Investors generally use a sell stop order to limit a loss or
to protect a profit on a stock that they own.

Stop-limit Order
A stop-limit order is an order to buy or sell a stock that combines the
features of a stop order and a limit order. Once the stop price is
reached, a stop-limit order becomes a limit order that will be executed
at a specified price (Or better). The benefit of a stop-limit order is that
the investor can control the price at which the order can be executed.