3. Internal Analysis Flashcards
Internal Analysis
This type of analysis focuses on understanding firms, which can be seen as a bundle of resources under common ownership/governance
3 components of Internal Analysis
Resources, Capabilities and Core Competencies
2 types of resources
Tangible and Intangible
Tangible Resources
Financial, Organisational, Physical, Technological
Intangible
Human,
Innovation, Reputational
Capabilities
Represents the capacity to deploy resources
(through complex interactions among tangible and intangible resources) that have been purposely integrated to achieve the desired end state.
Core competencies
When resources and capabilites serve as a source of compeititve advantage Based on resources and capabilities - Combining resources into bundles in unique and valuable ways
VRCN Analysis
Valuable, Rare, Costly to imitate, non-substitutable
Criteria for sustainable competitive advantage is that resources should be>
What is Value Chain
How a product moves from raw material stage to the final customer - allows the firm to understand the parts of its operation that create value and those that don’t
Value Chain Analysis
Primary and Secondary Activities
Primary Activities
Involve the products creation, sales and distribution to buyers and service after the sale
Support activities
Necessary assistance to the primary activities to take place. Includes firm infrastructure, HR, technologies development, and procurement.
Outsourcing
Purchasing a value-creating activity from external supplier.
Increases flexibility, risk mitigation, capital investment reduction.
If not creating value and others do it better - outsource
Internal Analysis Summary
Internal Organisation - Function of Resources, Capabilities and Core Compentencies
Match the internal strengths with opportunities and challenges found in its environment
Matching is crucial to create value and satisfy stakeholder goals, both domestically and internationally.
