15. What is Internal Analysis?
• The process of identifying and evaluating an
organization’s specific characteristics
– Resources, capabilities, and core competencies
– Looks at organization’s
• Current vision
• Mission(s)
• Strategic & financial objectives
• Strategies
16. Why Do an Internal Analysis?
• Enables a firm to identify its strengths and
weaknesses.
• Enables a firm to make good strategic decisions.
• Information from internal environment provides
basis for developing strategic alternatives.
17. A Quick Review of Organizational
Resources
• Organizational resources are assets an
organization has for carrying out work activities
and processes
– Financial resources
• Current debt, credit lines, equity, cash reserves, etc.
– Physical resources
• Plant & equipment, inventories, supplies, fixtures, etc.
– Human resources
• Management & employee skills, training, experiences,
etc
18. A Quick Review of Organizational
Resources
– Intangible resources
• Brand names, patents, trademarks, copyrights, etc.
– Structural-cultural resources
• Culture, history, work systems policies, formal
reporting structures, etc
• Human, intangible, and structural-cultural
resources can be a source of competitive
advantage
– Play important role in determining capabilities
or competencies and core competencies
19. Organizational Capabilities
• Organizational capabilities/competencies
– The complex and coordinated network of company
routines and processes that determines how
efficiently and effectively the organization
transforms its resources into products (goods &
services)
– Involves complex pattern of coordination between
people, & between people and resources
– It’s an internal activity that a company performs
better than other internal activities
20. Organizational Capabilities
• Organizational routines & processes:
• Regular, predictable, and sequential patterns of work
activity by organizational members
• Sustainable Competitive Advantage (CA):
• The prolonged maintenance of competitive advantage
• Capabilities that are capable of leading to CA today may
not continue to do so as conditions & rivals change
• Dynamic capabilities
• An organization’s ability to build, integrate and reconfigure
capabilities to address rapidly changing environments over
time.
21. Core Competencies
• Core competencies
– A well-performed internal activity that is central, not
peripheral, to a company’s strategy,
competitiveness, and profitability
– Major value-creating skills and capabilities that
• are shared across multiple product lines or multiple
businesses
• Results from the collaboration among different parts of an
organization
– Gives a company a potentially valuable competitive
capability
22. Core Competencies
• Types of Capabilities/Core Competencies
– Skills in manufacturing a high quality product
– System to fill customer orders accurately and swiftly
– Fast development of new products
– Better after-sale service capability
– Superior know-how in selecting good retail locations
– Innovativeness in developing popular product features
– Merchandising and product display skills
– Expertise in an important technology
– Expertise in integrating multiple technologies to create
whole families of new products
23. From Core Competencies to
Distinctive Capabilities
• Distinctive Capabilities
– Special and unique capabilities that distinguish the
organization from its competitors
– A competitively valuable activity that a company
performs better than its rivals
– Allow a company to develop a sustainable
competitive advantage and outperform its
competition
24. From Core Competencies to
Distinctive Capabilities
• Characteristics of distinctive capabilities:
(1) Contribute to superior customer value and
offers real benefits to customers
(2) Difficult for competitors to imitate
(3) Allow the organization to use that capability in a
variety of ways
• What’s the relationship between
organizational capabilities, core competencies
and distinctive capabilities?
25. Examples of Distinctive Capabilities
• Sharp Corporation
– Expertise in flat-panel display technology
• Toyota
– Low-cost, high-quality manufacturing capability and
short design-to-market cycles
• Intel Corporation
– Ability to design and manufacture ever more
powerful microprocessors for PCs
• Motorola
– Defect-free manufacture (six-sigma quality) of cell
phones
26. Strengths and Weaknesses
• Strengths
– Resources that an organization possesses and
capabilities that the organization has
developed
– Both can be exploited and developed into a
sustainable competitive advantage
• Weaknesses
– Resources and capabilities that are lacking or
deficient; and that
– Prevents an organization from developing a
sustainable competitive advantage
