NJ Business Valuation Toolkit: SWOT Analysis

Video Transcript 

My name's Robert Bonavito, New Jersey forensic accountant. This video is part of a series of videos where I discuss forensic accounting topics for educational purposes only. If this was a litigated matter, I would take a different approach, have different conclusions based on different facts and circumstances.

My name's Robert Bonavito and today's topic, we're gonna discuss something that we use in my firm when we analyze, most businesses do damage reports and such, it's a SWOT analysis. Most people have heard of SWOT, of course, you know it stands for strength, weaknesses, opportunities, and threats. And, you know, sometimes the basics are so important and when you look at a business, I think you should go back and actually go through this framework. And the reason you would do that is because it will help you develop a better story, a better narrative of what happened, when it happened, and how it happened just by, you know, actually going through the steps. And this is a great framework.

Now, you know strength and weaknesses are basically internal to the company, and opportunities and threat are external. So let's just run through a quick example. Let's say we're looking at United Parcel Service, okay, UPS, they deliver packages. Well, what's their strengths? Well, basically they have an infrastructure set up to deliver packages, which is very hard to duplicate, right? What's their weaknesses? Well, their weakness is they have high fixed costs. And if package deliveries drop, they're gonna lose money. What's their opportunities? Well, opportunities are, let's face it, no one really wants to go shopping today, Walmart and these other stores are having lots of problems because people like picking up the phone and ordering things and have them delivered to their house. Well that's an opportunity for United Parcel Services partnering with these companies. You know, what's a threat? Well, how about the U.S. Post Office, right? They have a branch located in every town and city, in a prime area of every town and city, I'm gonna add, and if they ever get their act together, they could easily cause substantial damage to United Parcel Service because they're already set up, right? It's just that they have...if they get into the big time into the package delivery business, they could almost put that company outta business.

So, you know, you would go into a lot more detail, but I just think that it makes you think. You know, it makes you put some thought into the business you're looking at. Strength, weaknesses, opportunities, threats. My name's Robert Bonavito. If you have any questions, feel free to email me.