Ch. 4 Learning Review Questions

Question 1

What is an internal analysis, and how is it different from an external analysis?

Answer 1

Internal analysis is the process of evaluating an organization’s resources, capabilities and core competencies.

The internal analysis looks at a company’s internal or functional areas, while an external analysis looks at the general or competitive environment.

An internal analysis identifies strength and weaknesses, while the external analysis identifies opportunities and threats.

Question 2

Describe the relationship between resources, capabilities, and competitive advantage.

Answer 2

Resources can be seen as the inputs for a company to perform its work. Capabilities are the various routines and processes that transform those inputs into outputs. Through experience in performing work routinely, workers learn how to best capture the value of these resources and turn them into competencies or distinctive organizational abilities. Which in turn can be come a competitive advantage if an organization can do it better or more uniquely than its competitors.

Question 3

What characteristics do distinctive organizational capabilities have?

Answer 3

1. Contributes to superior customer value
2. Cannot be easily imitated
3. Can be used in a variety of ways

Question 4

Define strengths and weaknesses.

Answer 4

strengths = resources possessed by an organisation & the capabilities that it has developed

weakness = resources and capabilities that are lacking or deficient.

Question 5

How would the value chain approach to internal analysis be used?

Answer 5

It is used by examining the primary and support activities of the value chain and the ability to create customer value through its work activities.

Question 6

What does an organizational internal audit evaluate?

Answer 6

It evaluates an organization’s internal areas. How well the basic organizational functions are performed. This assessment concentrates on the availability or lack of critical resources and the level of capabilities.

These areas are:

• production/operations
• marketing
• R&D
• financial & accounting
• management
• information systems

Question 7

Describe the criteria that can be used to judge organizational resources and capabilities as either strengths or weaknesses.

Answer 7

• past performance trends
• comparison against competitors
• how performance measure against targets/goals
• personal opinion of strategic decision makers or consultants

Question 8

Why is an internal analysis an important part of managing strategically?

Answer 8

• it is the only way to determine strength and weaknesses

- it’s needed to make good strategic decisions