Internal Analysis

Question 1

define the term internal (company) analysis

Answer 1

= the monitoring, evaluating and disseminating of relevant information from the company to key people within it

Question 2

why do we conduct internal analysis?

Answer 2

to find internal strategic factors (strengths and weaknesses)

Question 3

what is the difference between internal and external analysis? (from the company perspective, what they do with the results)

Answer 3

internal: companies figure out what they CAN do (S, W)
external: companies figure out what they might CHOOSE to do (O, T)

Question 4

discern the two approaches to the company analysis.

Answer 4

1. business and organisation analysis

2. internal factors analysis

Question 5

how is the business and organisation analysis done?

Answer 5

1. business analysis
   a. analysis of inputs (assets, employees)
   b. analysis of business functions (purchasing, operating, marketing, financial)
   c. analysis of performance
2. organisation analysis
   a. analysis of organisational structures (formal and informal)
   b. analysis of organisational processes (formal and informal)

Question 6

how is the internal factors analysis done?

Answer 6

1. all internal factors are identified (resources, knowledge, capabilities) = S, W
2. their characteristics are defined/recongised
3. internal strategic factors are recognised (those that affect company’s position and performance)

Question 7

state 7 characteristics of an internal factor

Answer 7

value
heterogenity
rareness
durability
unsubstitutability
immobility
imperfect imitability

Question 8

define the internal factor resources and state some examples

Answer 8

= asset, process, or skill. They are the source of company’s capabilities
alone, they don’t yield competitive advantage
tangible (physical, financial, human) and intangible (organisational)
EX: plant, equipement, location; # of employees and their skills; organisational culture and reputation

Question 9

define the internal factor capabilities and state some examples

Answer 9

= an ability to use resources to reach the company’s objective
a capability is functionally based and is resident in a particular business function (managerial, input-based, transformational, output-based)
EX: company’s marketing capability is based on the interaction among its marketing specialists, information technology, and financial resources

Question 10

state two characteristics of the internal factor of knowledge

Answer 10

1. gradually acquired through gathering

2. commercial knowledge most important = ensuring effective performance

Question 11

state two different classifications of knowledge

Answer 11

1. human vs structural
   - –H: linked to individual employees, highly risky due to the fact employees can leave
   - –S: linked to structures within the company, less risky (stays no matter what); divided into organisational and customer capital
2. explicit vs tacit
   - –E: can be easily communicated and tought, also easily imitated by competitors
   - –T: deeply rooted in employee’s experience/company culture, can be transferred with observation and experience, cannot be easily imitated

Question 12

define the characteristic of value

Answer 12

the internal factor helps the company to neutralise threats or exploit opportunities

Question 13

define the characteristic of heterogenity

Answer 13

the internal factor differs among different companies and causes differences in their efficiency

Question 14

define the characteristic of rareness

Answer 14

the internal factor is not possesed by many competitors

Question 15

define the characteristic of durability

Answer 15

the internal factor’s rate at which it becomes obsolete

Question 16

define the characteristic of unsubstitutability

Answer 16

the internal factor has no strategic equivalent

Question 17

define the characteristic of immobility

Answer 17

the internal factor either cannot be traded or trade is irrational

Question 18

define the characteristic of imprefect imitability

Answer 18

= internal resource would be very costly to reproduce for other firms (basically, it is completely unique to a firm)

possible reasons for harder imitation:

• —- historical (unique or rare events that helped us develop certain advantages)
• —- ambiguous cause (consequences of specific internal factors that are not entirely clear)
• —- social complexity (interpersonal relationships between managers, employees, customers, suppliers)