Once an external analysis is conducted, a company should
also think about doing an internal analysis.
The purpose of the latter is to utilize the resulting information for
strategic planning; that is, the plan for a company’s growth, success, and
market leadership. Identifying businesses’
strengths and weaknesses brings an organization closer to achieving its goals.
Most companies opt to do their internal analysis by
comparing themselves with their main competitors, with the goal of finding
those key aspects in which they are better [or worse] than the
competition. I remember they used
benchmarks in a former job and used them as comparison points for reference or
as a way of measuring how well [or bad] the company was doing.
SWOT Analysis
This is one of the most popular, yet robust, tools to
date. It provides the necessary insights
for the strategic analysis process by resulting in key information to plan and
implement corrective actions and measures, as well as favor innovation and
stimulating the creation of new projects.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats; it
facilitates the identification and articulation of strategies that allow the
organization to redirect their route by recognizing their current position and
providing elements to take a new course of action [1].
The advantage of the SWOT when utilized for internal
analysis is that the company has the
ability to change or influence the identified factors. Each company has a set of unique internal
resources that depend on people, financial status, IT, etc. These factors
establish the boundaries for how likely each company is to reach their
goals. In the planning process, it is
important to consider these factors.
Classic Method –
Strategic Profile
Some consider this method to be the initial tool for
strategic diagnoses, and its main purpose is to construct a strategic profile [2]. The process to devise a strategic profile
constitutes:
- Determining key success factors in the business and categorizing them into functional areas. Six is the recommended maximum number of factors to identify and work with.
- Appraising the company’s capacity vis-à-vis these success factors. A scale of -2 to +2 is common with the industry standard represented by 0.
- . Comparing the resulting [and illustrated] profile to our main competitors. Those areas in which the company is found to the right of the competitor (towards +2) will be stronger for the company and viceversa.
Value Chain Model
The third tool that I found is called the value chain. This is none but the way in which the company
adds value to their products and/or services, as it improves over time and
takes raw material into a finished product.
The value chain analysis is employed as a criterion to identify the
capacities of a business based on activity break down [3]. The idea is to observe each step of the
process from concept to final product, including all the services that are
involved in the process such as distribution, retailing, etc.
Some of the “perks” of this model include, but are not
limited to:
- Enables an “inside-out” analysis
- Identifies the most relevant aspects from a competitive standpoint
- Relates strengths and weaknesses in terms of the importance of each step in the process
- Allows for calibration with resources and their redistribution
Something that was very interesting to observe in my
organization was that they had a very hard time being impartial when it came
down to evaluating themselves and their competitors. These tools, as much as they might have the
potential to be really useful, require that the company utilizing them is as
neutral and objective [and honest] as possible to guarantee the effectiveness
and validity of results. Can companies
really set emotions aside when conducting self-assessments? How difficult can
this be?
References:
By Elisa Taymes
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