1. Strategic Management Chapter 4 “Internal Analysis”
Diana Perkins
Ashley Gonzenbach
Brian Byrne
Amanda Long

2. What Will Be Covered What is an internal analysis
How to do an internal analysis
Why an internal analysis is important

3. What an Internal Analysis Is
The process of evaluating an organization’s resources and capabilities.
Provides information on organization’s assets, skills, and work activities.
What is good? What is lacking?
Most Important- Evaluating resources, capabilities, and core competencies

4. Organizational Resources
Info On Resources
Comparison to Companies
Assets for doing business
Inputs needed to perform work
What it has
Financial, physical, human, intangible, structural, cultural
Important in producing capabilities and core competencies
Can lead to a competitive advantage
Kraft- size, people, knowledge of the industry, companies within
Cirque du Soleil- performers, producers, sets
Apple- human capital, market share, partners, knowlege

5. Organizational Capabilities
Info on Capabilities
Comparisons to Companies
Various routines and processes that transform inputs into outputs
Organizational routines and processes- regular, predictable, sequential work activities done by organizations and its members
Interaction between people and resources
Some never get the hang of it
Capabilities change
Dynamic Capabilities- ability to build and integrate capabilities to address rapidly changing environments
Kraft- Produce food, markets food, deliver products
Cirque du Soleil- Best performances and venues
Apple- Provide leading technology to the masses

6. Distinctive Organizational Capabilities
Special unique capabilities that distinguish an organization from its competitors
Three Characteristics:
Contributes to superior customer value and offers real benefits to customers
Difficult for competitors to imitate
The capability should be usable in a variety of ways

7. Organizational Core Competencies
Info on Core Competencies
Comparison to Companies
Any major value-creating capabilities that are essential to business
Capabilities are the building blocks of core competencies
Any core competencies are created out of routines, processes, knowledge, work activities (resources & capabilities)
Kraft-largest confectionery, food, and beverage corporation headquartered in the US. Markets brands in more than 155 countries.
Cirque du Soleil- The performance itself
Apple- Customer service, Apple experience

8. In Simpler Words Internal Analysis assesses:
What an organization has/doesn’t have
What an organization can/cannot do
Strengths- resources an organization possesses & capabilities it has developed
Weaknesses- resources and capabilities the organization lacks or are deficient

9. Gaining a Competitive Advantage
Resources, capabilities, and core competencies all link together
Can’t have one without the other
How strengths and weaknesses are managed changes an organization
Members at all levels deal with these strategic decisions

10. How to Do an Internal Analysis
Three approaches to Internal Analysis
Value Chain Analysis
Views the organization’s work
Internal Audit
Used to examine and asses all internal areas of an organization.
Capabilities Assessment Profile
Develops a profile on the organization’s capabilities.

11. How to Do an Internal Analysis
Value Chain Analysis
A systematic way of examining all the organization’s functional activities and how they create customer value.
Comes from 3 categories
Unique product
Low prices
Meets the needs of a specific group of customers quickly and efficient

12. How to Do an Internal Analysis
Value Chain Analysis
Primary activities
Activities that create customer value
Support activities
Support the primary activities

13. How to Do an Internal Analysis
Internal Audit
A thorough assessment of an organization’s internal areas.
Six organizational functional areas:
Production-operations
Marketing
Research and development
Financial-accounting
Management
Information systems

14. How to Do an Internal Analysis
Capabilities Assessment Profile
- evaluation of an organization’s capabilities
Two Phases
1. Identifying distinctive capabilities (5 steps)
2. Developing and leveraging distinctive capabilities

15. Phase 1: Identifying distinctive capabilities
How to Do an Internal Analysis
Phase 1: Identifying distinctive capabilities
1. Prepare current product-market profile
2. Identify sources of competitive advantage and disadvantage in the main product –market segments
3. Describe all the organizational capabilities and competencies
4. Sort the core capabilities and competencies according to strategic importance
5. Identify and agree on the key capabilities and competencies

16. How to Do an Internal Analysis
Phase 2: Determining Strengths and Weaknesses
Are organizational resources and capabilities strengths or weaknesses?
Criteria to measure against
- Past performance trends
- Specific goals or targets
- Comparison against competitors
- Personal opinions of strategic decision makers or consultants

17. Why an Internal Analysis is Important
Two Reasons:
1. Identifies an organization’s strengths and weaknesses
2. Needed for making good strategic decisions

18. Why an Internal Analysis is Important
Identifies Strengths and Weaknesses
Outcome from Internal Analysis is information about resources, skills, work routines, and processes
What strengths and weaknesses do we have because of our specific resources and capabilities?
-Kraft Foods go Global
No Internal Analysis = No critical strategic information

19. Why an Internal Analysis is Important
Used to Make Good Strategic Decisions
Use this critical strategic information for decision making
Determine current competitive advantages, discover potential advantages, and what is preventing competitive advantages from being developed
Provides basis for which strategic actions are necessary for sustainable competitive advantage
- Kraft Foods invests in “Power Brands”

20. Three Takeaways What an Internal Analysis is
- Process of evaluating an organization’s resources and capabilities
- Resources are inputs and capabilities transform inputs into
outputs
How to Do an Internal Analysis
- Value chain—examines functional activities that create customer
value
- Internal Audit—assessment of internal functional areas
- Capabilities Assessment Profile—evaluates organization’s
capabilities
Why an Internal Analysis is Important
- Identifies strengths and weaknesses
- Needed for making good strategic decisions