4 Critical Features of Internal Analysis
An internal analysis highlights three factors: an organization’s competency, resources, and competitive advantage.
Specifically, the study examines strengths and weaknesses, helping firms make smart decisions that promise business sustainability and profits.
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1. Resources are necessary…but not all
An internal analysis highlights several areas of interest to understand and prioritize benefits as a competitive advantage. Specifically, it examines the usefulness of resources alongside a company’s primary objectives, mission, and strategies.
‘Resource’ is a broad term. In the case of business, resources tend to be financial, physical, intangible, and physical assets.
Not all resources are valuable. They may be a hindrance if they don’t help the company reach goals.
Companies seek long-term competitive advantages. They will invest in resources that ensure they have a leg up on the competition. But resources that do not merit benefits must be cut. Otherwise, they become a weakness.
While internal analysis looks at resources as a benefit or disadvantage, the company’s relationship with resources must be examined too.
2. Resource and company relationships must be positive
How organizations work with resources or the relationship the two have, may put it on a beneficial path. A company must first understand the resources at their disposal, how valuable it is, and whether this aligns with business goals or not.
If it is valuable and it aligns with the objectives, the organization will dedicate appropriate management to foster a relationship that yields an advantage. The results provided by the resource informs teams whether they’re working well, need to configure their plan of action or cut their losses.
3. The strengths of supplies
Strengths are related to both resources and the organization.
Resources must be valuable. Otherwise, it’s a time suck and a waste of funds.
Companies need resources that are exploitable. It needs to offer a competitive advantage. And a long lasting one, if possible.
Consider this: the easier it is to get the resource, the more likely competitors will take or use it as a substitute. If everyone floods a market with this resource or gain the same benefits you do, is it a competitive advantage? No. The value has decreased for your company.
Sometimes competitors will try to mimic or substitute the resource if they can’t get their hands on it. That’s fine. It may lack quality or substance, making the opponent look poor in contrast to your organization. Their attempt bumps up your selling position. Because if the substitution can’t reach the quality of the original resource that you have, it only makes your firm look better.
These are strengths that make a resource valuable.
But remember: not all organization supplies are beneficial. And if they’re not, it only reflects poorly on the firm.
Internal analysis examines how to use valuable resources but also how to detect weakness in supplies.
4. Internal analysis and Weakness
Weak organizations are at a disadvantage. They are incapable of keeping up with competitors. And therefore, can never surpass them. The internal analysis will highlight organizational weaknesses to reduce or eliminate them.
A company can’t prosper when weaknesses are seeping through.
Companies must grow to be successful. And weak supplies prevent this growth, keeping businesses still until they can’t survive any longer.
Weakness will never provide a competitive edge. They soak up funds and time. When the only result is negative, it’s best to cut the weakness out.
Internal analysis highlights these problem areas to ensure the company can prosper.
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