ACTIVITY 3 – SWOT ANALYSIS

Team Number 7 Year/Course/Section 3-BSA-1

Section 1 – Team Answer: JKL Co.

STRENGTHS WEAKNESSES
1. Strength of JKL Company Higher 1. Higher operating expense ratio than
profit margin of 6% rather than ABC Co.
3% of ABC Co.
2. Higher tax ratio than ABC Co.
2. Higher Return on Equity of
16.67% than 9.09%.

OPPORTUNITIES THREATS
1. Adapt new technological 1. Low financial resources to support
advancements for operation to the various potential business
counter the competitor’s more opportunities.
ideal operating expenses and 2. Potential actions of a competitor to
obtain profitable growth. improve, process, methods,
2. Expand investment options to products or services to be more
increase value of equity (net effective and efficient. Improving
worth) to reliable and
financial management and
advantageous investments in the
monitoring competitor.
market. Constant stream of
income from these investments
can boost the profit and equity as
opposed to the competitor.

Justifications
A comparable analysis of financial statements between our company, JKL Co.
and to our competitor, ABC Co. is done through the use of financial ratios. JKL Co. is
more advantageous in terms of return on sales, return on equity, and lower
percentage of COGS over sales. Its disadvantages compared to our competitor are
the percentage of operating expense over sales and its bigger amount of taxes paid.

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Strengths
1. Strength of JKL Company Higher profit margin of 6% rather than 3% of ABC
Co.
2. Higher Return on Equity of 16.67% than 9.09%.
3. Strategies of JKL Company. Appropriation of retained earnings for plant
expansion to produce more finished products to lower the variable cost per
unit and sell at a low price and invest for research and development to
improve the quality of the products. Improve and monitor the efficiency and
effectiveness of the manufacturing process to reduce cost to produce the
product. For example: Mismanagement of raw materials in production .

Weaknesses
1. JKL has higher operating expense ratio with 35% of sales than ABC Co. with
30% only.
2. Paid higher Taxes than ABC Co.
3. Strategy to avoid having high operating expense ratio is to increase the sales
of a corporation but to remain constant on its operating expense, or if it
increases, it should not exceed to the proportionate value to its sales.
Because the lower the operating expense ratio, the better the performance of
a company. And it can be done through increasing its normal annual sales.
When it comes to their taxes, JKL Co. should be more observant in their tax
benefits and maximize their allowable deductions.

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 ACTIVITY 3 – SWOT ANALYSIS

Opportunities
1. Adapting to New Technological Advancements for Operation.
2. Expand Investment Options.
3. - Incorporate this through market research.
- Optimize options for technologies available at an affordable price in the
market by surveying reliable market companies/shops.
- Set up training sessions for the use of these technologies and its
maintenance and sanitation.
- Encourage continuing education for the employees about these
technologies.
- Use brokerage firm to gain advantage in market information and cost-
saving.
- Invest in investments providing constant stream of income.

In my opinion, most companies with advance technologies together

with its efficient and effective use in operating processes is an utmost
importance in success and growth. But then, it still starts with the employee’s
competence in using these. So, trainings with employees is also considered
important and significant in adapting it in day-to-day works. JKL Co. is
capable of investing or purchasing better technologies as seen on its financial
statements alone.
In the reason that its operating expenses is a little unfavorable in ratio
analysis compared to the competitor, technologies, as I perceived it, can
enhance and speed up production, reduce the burden of high operating
expenses (such as utility bills) and improve quality of products offered. After
all, fast production leads to easy distribution based on demands, and the risk
of human error will be reduced significantly, leading to less burden on
operating expenses like abnormal costs and such. By then, profit/retained
earnings will increase because of reduced operating expenses, enabling JKL
Co. to counter its little disadvantage against competitor.

Moreover, expanding investment options can be done through

appropriate resource management and research on investments earning with
sustainable returns and appreciates significantly. In my opinion, income
investing is one strategy can help JKL Co. as it is a specifically structured
portfolio that generates regular income. Constant stream of income can
increase revenue of the firm, enabling them to cover cost of capital and other
expenses for high equity returns. JKL Co. can also use trustworthy brokerage
firms to get market knowledge and save money. By incorporating these
strategies, JKL Co. can surpass the net worth (value of equity) compared to
ABC Co. which is one of JKL’s weakness against the other.

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 ACTIVITY 3 – SWOT ANALYSIS

Threats
1. Low financial resources to support the various potential business
opportunities.
2. Potential actions of a competitor to improve, process, methods, products or
services to be more effective and efficient. Improving financial management
and monitoring competitor.
3. Improving financial management of the business will monitor financial
position, will monitor its day-to-day cost acquired, having an up-to-date
accounting record and identify the right funding to finance the business to
support the future needs and opportunities of the business. By monitoring
competitors the business can identify what the competitors up to and by
performing some analysis on that the business can also gather new idea for
improvement and action that can be useful.

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 ACTIVITY 3 – SWOT ANALYSIS

Name Andrin, Michael L.

Year/Course/Section 3BSA1

Section 2 – Individual Contribution and Reflection

Weaknesses of JKL Co.

I contribute to the team are the weaknesses of JKL Co., in which they have a higher
ratio when it comes to operating expenses and the taxes they paid compared to ABC Co. As
I compute the ratio on operating expense to its sale, ABC Co. has a rate of 30%, while JKL
is 35%, it means ABC Co. is more responsible in lowering the risk on operating expense
than JKL Co. Same with their income tax, when their taxes are divided to their taxable
income, ABC Co. has a tax rate of 25%, while the JKL Co. is 21.7%, it means ABC Co. is
more observant to their tax benefited and to their allowable deductions than ABC Co.

Write your Reflection here as regards to the activity.

With regards with the activity we made as a team which is making a SWOT Analysis
about the company we chose, JKL Co. as our basis, and comparing it to its competitor, ABC
Co. Both company has its strengths and weaknesses, in which for the ABC Co. has a
strengths on lowering the risk on operating expense and observing their tax benefits and
allowable make which also lower the rates on their tax payable, while the JKL Co. is good on
increasing their profit margin and return on equity, which also made them at a high net
income. Speaking about their weaknesses, is just the reverse of their strengths.

Everyone has own weakness and strength, which shouldn’t be judge by anyone by
just seeing the weakness points of a certain person, because we too has our own weakness,
and I’m sure that if you’re judge too you’ll not be feeling good. So instead of judging or
underestimating of one person, let’s just find out our own weakness and improve it and make
it as strength for your own good. Like me I can say that I am strong in terms of sports like
basketball, Volleyball, Futsal etc. but I am weak in terms of academic subjects, or not really
weak but not that strong. Though I am weak nor strong on a certain matter, I am also willing
to accept every opportunities that might be given to me to improve my ability and coup up
with those people stronger than me. And finally I should avoid threats that might to a fall of
my carrier.

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