Strategic Management: Formulation and Implementation

Internal Organizational Analysis

In formulating a strategy, the strategic decision makers must also analyze conditions internal to the organization. An internal analysis leads to a realistic company profile, which is the determination of a firm's strategic competencies and weaknesses.

The development of a company profile in four-step process:

* In step 1, managers audit and examine key aspects of the business's operation, seeking to target key areas for further assessment.

* Step 2 has managers evaluating the firm's status on these factors by comparing their current condition with past abilities of the firm.

* In step 3, managers seek some comparative basis - linked to key industry or product/market conditions - against which to more accurately determine whether the company's condition on a particular factor represents a potential strength or weakness.

* The final step in internal analysis is to provide the results, or company profile, as input into the strategic management process.

This explains internal analysis as a process, but in practice, efforts to distinguish each step are seldom emphasized because the process is very interactive.