The Internal

Environment
Analysis
VISPERAS
The Internal Environment

A strategic management analysis is conducted to provide

companies with competitive advantage. External
environment scanning or analysis alone is not enough to
achieve it. Strategic managers must also consider the
need to scan or analyze the internal environment of a
company. An internal environment analysis identifies a
company’s internal strategic factors.
Strategic Elements
1. Corporate structure
2. Organizational structure
3. Business resources
Corporate Culture
Every company has its own separate and distinct culture.
Corporate culture refers to the beliefs, values, practices
and expectations of every member of a company on how
the company conducts itself.
Organizational Structure
The pattern of the relationships among the members of a
company is depicted in organizational structure. A
company’s structure defines how tasks are to performed,
how resources should be utilized, and how relationships
among employees should defined.
Business Resources
Resources are assets owned or controlled by a company.
They can be tangible or intangible assets.
A resource is considered strategic when:

1. It can exploit opportunities

2. It is not common among competitors
3. It is difficult or costly to imitate or copy
4. There are no equivalent substitutes
Conducting an internal environment analysis
1. An external environment analysis uses secondary data, while an internal
scanning makes use of primary data.
2. An internal environment analysis evaluates the five strategic elements
comprising the internal environment separately, while an external
environment analysis simultaneously scans the different strategic factors.
3. An internal environment analysis includes an assessment of a company’s
competency to exploit opportunities and gain competitive advantage.
Analyzing Corporate Culture
One of the best ways to assess corporate culture is to
determine the present state of the individual or employee,
the group of functional unit, and the entirety of a
company.
To conduct a corporate culture scanning, the
following steps are to be performed:
1. Identify cultural values and core beliefs.
2. Gather information about the employees’ perception of company values
and beliefs.
3. Rate company practices, values and beliefs as perceived by the
employees.
4. Integrate collected information from research and observation.
5. Describe the company’s current culture, whether it can provide competitive
advantage or not.
Analyzing the Organizational Structure

The analysis of an organizational structure starts by

evaluating the present organizational chart. The chart
reflects the arrangement of work groups, flow of
communication and reporting, and chain of command in
company. The objective of the analysis is to determine
the structure that can achieve the organizational goals
effectively and efficiently.
When analyzing an organizational structure,
the following steps are to be observed:

1. Assess the present business model and organizational

structure.
2. Identify problems encountered recently with present
model and structure.
3. Examine the performance of different functional units.
4. Define possible measures to improve the structure.
There are several types of business models
that a company may adopt:

1. Profit pyramid model

2. Advertising model
3. Customer solution model
4. Efficiency model
5. Entrepreneurial model
Analyzing Business Resources
1. Financial resources
2. Human resources
3. Physical resources
4. Technological resources
5. Organizational resources
Steps in identifying the core and
competencies of a company:
1. Determine if the company has valuable resources or capabilities.
2. Scan if competitors have the capabilities to provide what customers
consider valuable.
3. Assess if the company’s resources or capabilities can be imitated.
4. Evaluate if the company is organized to exploit its resources and capture
what customers consider valuable.
5. Assess if the company has competitive advantage.
References:
Aduana, 2021, Strategic Management, C&E Publishing, Inc. Quezon City Dess, McNamara, Eisner,
2017, Strategic Management, Eight Edition, McGraw-Hill Int.,Philippines.

Disclaimer:

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