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SWOT Analysis & Quality of Management

What Are Strengths, Weaknesses, Opportunities, And Threats (SWOT) Analysis?

Each & every business has its strengths and weaknesses. It is excellent for the analysts to recognize and file both to represent the circumstances. Correspondingly, the analysts identify an occasion to the business and possible risks to the trade in the form of opportunities and threats. SWOT analysis is nothing but a way of filing strengths, weaknesses, opportunities, and threats in one position in a brief way.

While strengths and weaknesses are internal to the company, opportunities in SWOT analysis and threats in SWOT analysis pact with the external environment of the business, SWOT analysis gives the person who reads a short but complete and meaningful snapshot of a business.

Quality Of Management (Including Independent Directors) And Governance

Governance means briefing the "Truth" in all features of life. Either management is moral or not principled, as there can't be something in between.

According to Warren Buffett – "I look for integrity, energy, and intelligence in management." In the nonexistence of first quality (integrity), management with two later qualities will compress the business and investors at a point in time. While handing over the money to the management, analysts should spotlight the integrity/ethical features of the business considerably. Regrettably, this characteristic seems to be missing from the research reports.
The market may overlook unskilled management but not immoral management over a period of time.

A simple example of this is the brand 'Amul,' which has become identical to milk in India. Right from its setting up till date, it has taken lakhs of small farmers all along with it and still has guaranteed that each person of the co-operative is given his/ her due in the most see-through style while on the client-side has always ensured that quality is never cooperation.
Analysts should also pay notice to the eminence of independent directors in a business. Independent directors are a big misleading notion where companies/promoters decide to keep their friends and others, without thought of significance, as their independent directors.

This is taken care beyond disbelief exercise to bring some theorists to the business to take it well-known. Analysts should focus on the credentials and skills of these independent directors, how many meetings they are present at, and what their assistance is to the business. It may be a good rehearsal to interrelate with some of them to appreciate them better.

What Is Pricing Power And Sustainability Of This Power?

Pricing power explains the ability of the company to direct the pricing of its products or services. As companies would love to charge as much as they can to the customers, they may not be likely to exercise. Pricing is a point of many parameters, external and internal, the smallest amount of which is the company's decision. Most businesses are price takers and not price makers.
In any aggressive industry/business, pricing demand is practically missing. According to the quote of Charlie Munger – "in a competitive landscape, every business is as smart as its dumbest competitor." If a competitor reduces the prices noticeably, others would have no option but to match that price to stay in business.

A company's pricing power will also be based on the product or service's suppleness in-demand shown signs. If a boost in price marks a lessening demand, then the facility of the company to pass on cost boosts or have a higher mark-up will be incomplete.
Consequently, pricing power is normally a role of industry dynamics, suppleness of demand and branding, and customer loyalty/addiction. Strong brands and virtual monopolies play a significant feature in the pricing power. The tobacco business stands as a good business.

 

 

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