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Internal Environment Analysis: Uncovering Strengths, Weaknesses, and Winning Strategies
What is Internal Environment Analysis?
Internal environment analysis is a deep dive into a firm’s inner workings to assess its resources, capabilities, and core competencies. It answers questions like “What do we have?” and “How can we best use it?” This analysis is crucial for strategy formulation, allowing firms to identify and optimize strengths while acknowledging and addressing weaknesses.
Key Elements of Internal Environment Analysis
1. SWOT Analysis
SWOT analysis highlights a company’s internal strengths and weaknesses (as well as external opportunities and threats). While it’s easy to lean on strengths, it’s important to remember that a strength today might not remain one tomorrow. Ever heard of Blockbuster? They had the strength of a vast video rental network — until they didn’t.
Example: A company might list their skilled workforce as their main strength, but the outdated technology they use could be a weakness. By knowing this, they can strategize to train their workforce in new technologies to gain an upper hand in the market.
