Like so many approaches in economics, the SWOT analysis was also developed at Harvard Business School.
Simple and manageable:
There are numerous analysis methods, many of which require considerable background in financial mathematics. With the SWOT analysis, you can at least partly develop a sense of whether a company offers a favorable market position.
Strength-opportunities:
How can existing opportunities be utilized to seize new opportunities and thus ensure long-term success?
Weakness-threats:
Where are the weaknesses of the company? What needs to happen to prevent these weaknesses from turning into a situation of danger? What defense measures can be taken and implemented immediately?
Weakness-opportunities:
How can new opportunities arise from internal weaknesses or how can risks be transformed into opportunities?
Strength-threats:
Which threats must be averted to allow existing strengths to fully unfold (defense)?
How is the SWOT analysis applied?
Based on this information, you create a matrix. Ideally, for practice, you should focus on companies that you know very well or that are very transparent in their business model.
The Facts:
Our Conclusion:
The SWOT analysis is less about metrics and classic valuation standards, and more about assessing the sustainability of the business model. This method makes it easier for you (and us) to filter out stocks that are worth taking a closer look at.
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