SWOT stands for strengths, weakness, opportunities and threats. The first two are internal to the company while the two are external. The basis for getting the strengths and weakness of the company is the financial analysis (Meigs and Meigs, 1995) which is already conducted. The basis of the of the industry’s opportunities and threats is an environmental analysis using primarily on the economy, technology and government regulation.
2. 2. 1 Strengths and Weakness
Based on the financial analysis conducted, the company is profitable given its very high return on equity. However its return on assets is quite low at 0. 01 for the years 2004 through 2006 hence there is a need to improve the same. Its liquidity based on 2006 was also found to be good at a 1. 33. Its solvency was also found to be satisfactory. Hence it may be said that part of the company’s strengths are its profitability, good liquidity and satisfactory solvency.
2. 2. 2 Opportunities and Threats.
2. 2. 2. 1 Continued growth and global economy and globalization Growth in the world economy is felt around the world as can be seen in increasing standards of living among many nations. UBS (2008) explains that the foundation of the this growth was actually laid long before and this include the Bretton agreement in 1944 on international monetary management, the establishment of the IMF in 1945 and the General Agreement on Tariff Trade and Tariff (GATT).
These developments are noted by UBS (2008) to have stabilized the exchanged rates and brought down many trade barriers and strengthened the conduct of international commerce between industrialized countries.
2. 2. 2. 2 Continued deregulation of market of the international financial markets As more countries join the world economy, more countries are opening their countries for foreign investment and the financial services industry is an indispensable part of the economy that could be benefit from these developments.
UBS (2008) cited that deregulation coupled with the development of the in technology particular in information and communication had aided the financial specialists to create a long list of innovative products. These products, which range from credit cards to derivatives, have changed the global landscape for financial global system thus bringing more sophisticated player in the industry. At some extent it may have even caused many banks to merge as they compete in the industry.