- OBJECTIVE
The primary objective of this analytical exercise is to identify sources of profitability in the firm's internal environment.
In this section, you will identify and appraise the internal resources, capabilities, and core competencies of your selected firm. The goal of the analysis in this section is to paint a clear picture of what your chosen firm is like currently and likely will be in the future. More specifically, you are to identify firm-specific factors and evaluate if they are having a positive and/or negative impact on firm performance.
If the firm operates in several businesses you will study the above mentioned in its dominant industry (the one you focused on in the external analysis). Illustrate how the firm uses these throughout its value chain in support of its business-level strategy. [You will assess the business strategy of this firm in the next section]. Your insight into the firm’s key resources and capabilities that may be giving, or have the potential to give it a competitive advantage [to be analyzed in the next section] is central to your internal analysis.
Do NOT be one-sided – don’t make this read like an advertisement for the firm. You need to be critical – surely this firm is not the greatest thing since sliced bread. Weaknesses may be not be obvious, so do some serious research.
CONTENT
1. Identify the chosen firm's Resources
A good place to start with an internal firm analysis is to catalog the assets possessed by a firm. Make a list of the firm's tangible and intangible assets.
Tangible Assets
Building, equipment, etc.
Intangible Assets
Contracts, intellectual property, etc.
2. Perform a Value chain analysis for your chosen firm X to identify various capabilities.
Briefly describe firm X's principal functions and activities. Identify the distinctive capabilities in each of these functions/ activities.
3. Appraise the firm's Resources and Capabilities
Appraise the above identified resources and/or capabilities' potential for value creation. Use the framework provided in chapter 3.
4. Identify the core competencies that are at the heart of the firm's competitive advantage. (Remember, a firm will have only one, or at most a few, core competencies, by definition.)
Take the list of capabilities from question 2 earlier and review them to identify the firm's core competencies. Typically, a firm's core competence would be a higher-level (and often cross-functional) capability, which comprises several component capabilities.
5. Use the strategic activity system framework to map the important and supportive activities the firm has and that are key to delivering and sustaining the firm's value proposition.
How do firm X's choices for its activities fit together? List the three to five major things the firm does well. Map those activities out on a page as large circles and then start to outline how they are connected with each other and then add in several supporting activities in use by the firm.
