Internal Analysis

Question 1

Why are resources and capabilities so important?

Answer 1

They are the only thing you have control over to obtain a competitive advantage.

Unlike porters 5 forces and PESTEL which are constantly changing and out of your control.

Question 2

Why is an internal analysis difficult to perform?

Answer 2

There is no list or document of resources and capabilities.

Question 3

What are the 3 elements of a resource analysis?

Answer 3

Tangible: Physical assets, buildings machinery ect.

Intangible: Brands, reputation, knowledge

Human resources: Employees

Others could be: process/systems or culture.

Question 4

What are strategic capabilities?

Answer 4

Capabilities that create value for customers, are better than the capabilities of most competitors and are difficult to imitate or replicate.

Example: For McDonalds these include – how they train people, how they motivate people and the limited product selection.

Question 5

What are the types of Internal analysis used to identify strategic capabilities?

Answer 5

Resource Analysis
Functional analysis
Value chain analysis
VRIO framework

Question 6

What is a functional analysis?

Answer 6

Look at the firms functions or departments and identify the things they are good at.

Question 7

What is a value chain analysis?

Answer 7

The internal activities a firm does when transforming inputs into outputs and each activity adds value. Essentially where can you create economic value among each activity whilst cutting cost.

Question 8

What is the VRIO framework?

Answer 8

Firms need to answer if their service or products are value (value compared to cost), rare (need to be better than competitors), imitability (can it be substituted or replicated), organisation (can the firm exploit the resources).