Swot And Capital Investment In Carbon Fibers

The carbon fiber industry has been growing rapidly over the past few decades and

new firms are looking to cash in on the products creation as an alternative source of production material. Carbon fibers are cheap, light-weight, and most importantly durable material capable of withstanding pressure well above a typical materials stress capabilities.

The carbon fiber industry is a place ripe for investments with many products of the coming century being made out of this material. In order to determine the likelihood that any investment firm will take the plunge and invest in this new and idealistic composite material, a SWOT analysis and Capital Investment analysis of the entire market and industry should be performed. In the SWOT analysis of the carbon fiber industry a person will investigate the strengths, weaknesses, opportunities, and threats of each company involved in the production, wholesale or retail, and integration into modern products that carbon fiber has become a part ofa long and arduous task.

The SWOT analysis will then later be used in the capital investment analysis of the firm in which the investor particularly intends to invest. Once a viable firm is selected based on the applicability of the SWOT analysis from the carbon fiber industry, a further test of the firms ability and risk to produce proper cash flows in the futurea process known as discounted cash flowswill be determined; lastly as risk-reward analysis will be performed to ensure the investors risk portfolio. Alternatively, a company can use capital investment analysis to determine the usefulness of a piece of machinery used to produce the carbon fibers in the first place. This capital investment analysis will determine the immediate cost to purchase a piece of equipment or the present value of a historical cost of purchased equipment and then will use discounted cash flow analysis to determine the usefulness into the future of the piece of machinery or equipment. Alternatively the firm might use utility analysis to determine the use to the firm of the particular piece of equipment. If the equipment proves to be uselessthat is its cost exceeds its expected future production of cashthen the firm will either choose to sell an already owned piece of machinery or decide to purchase a more enticing product.

In general the usefulness of SWOT analysis and capital investment analysis can be used to determine which firms to invest in within the carbon fiber industry. Firms who have great strengths and opportunitiesespecially those which outweigh the weaknesses and threats have strong strategic opportunities in this growing field. Additionally, those who pass an initial capital investment test will prove to be substantially profitable to the investor in the future as long as the carbon fiber industry continues to grow.

by: Bryan JOnes

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