SWOT analysis of Bank of America for investment decision-making

Bank of America SWOT Analysis:

Bank of America is one of the principal financial institutions across the globe with a broad range of customers that include individuals, small businesses, middle-market businesses and large corporations. The company also has a diverse range of products and services including asset management, banking, investing and other financial products. Currently, Bank of America is regarded as America's largest bank holding company in assets and the second largest in market capitalization ("SWOT Analysis of Bank of America," 2010). Bank of America basically operates in the United States, Europe, Canada and Latin America with its headquarters in Charlotte, North Carolina.

In addition to having a workforce of 284,000 employees, the company serves a diverse range of customers in over 150 countries around the world and has a strong relationship with the Fortune Global 500 companies. Since it market position is supported by a well-established distribution network which is unparalleled by its competitors, it enjoys a dominant market position with which it gains a competitive advantage over other companies in the industry.

Strengths:

First, the company is one of the leading financial institutions in the world with franchises across businesses that provide it with scale benefits. While it's a basic dealer in 16 countries, Bank of America is among the top three companies in significant capital markets areas worldwide. Secondly, the company has stable revenue and earnings which is as a result of its revenue streams that are well spread by business and products. Over the last few years, the company has been able to register revenue and profits' growth on an adjusted basis because of the varied revenue stream. The other strength of this company is the potency of its balance sheet and the support it receives from government in times of crisis to avoid liquidity and solvency.

Weaknesses:

While the company serves clients in more than 150 countries, it only generates 10% of its sales in international markets and 90% sales in the United States. There is a likelihood of the persistence of the increasing loss trend at Global Card Services which will have a significant impact on the overall returns for the company.

Opportunities:

Bank of America received financial aid under the Troubled Assets Relief Program (TARP) in 2008 which brought a huge burden in terms of cash outflow. The repayment of this loan is an opportunity for the company to save cash outflow in terms of dividend payments which will in turn expand the company's profitability. The other opportunity for the company is investments in emerging markets that is likely to raise its growth rate and profitability ("Bank of America Corporation," 2011). These markets provide profitability growth and expansion for Bank of America because of their accelerated growth.

Threats:

One of the major threats for the company is the proposals for regulatory reforms being discussed both nationally and internationally because of the recent financial crisis. Such regulatory reforms are likely to have a major impact on the strategy, success and financial performance of the company. The second threat is the likely increase of funding costs because of the increased competition for retail deposits which has resulted in re-pricing of loans and advances.

Investment Decision:

Based on this analysis, my decision on whether or not to invest in Bank of America will incorporate its past market trends, the company's ability to tolerate risks and mitigate threats as well as the investment horizon emanating from the company's business opportunities.

Bank of America's Internal and External Stakeholders:

Bank of America highly regards its position in serving as a means of success and growth for many individuals, families, households and businesses across the globe (Moynihan, 2011). As a result the company always strives to conduct business in the right way for both its internal and external stakeholders. The company's internal stakeholders are its employees who are an essential ingredient for the achievement of the organizational mission. Some of the major needs of these stakeholders include individual and career development, compensation and rewards as well as the maintenance of good labor relations.

To ensure that the employees' needs and wants are fulfilled, the company has a human resource department that handles all the administrative needs of employees. The department has formulated policies like the equal employment opportunity, career development strategies, leadership training and compensation and rewards program to fulfill the wants and needs of the company's employees. Through these policies, programs and commitment to conduct business the right way, Bank of America has continually fulfilled its employees' needs and recorded profitability growth.