The Context of Internal Analysis

• In analyzing a firm’s internal organization, in today’s global economy, some of the resources that were traditionally critical to firms’ efforts to produce, sell, and distribute their goods or services, such as labor costs, access to financial resources and raw materials, and protected or regulated markets, although still important, are now less likely to be the source of competitive advantages.
• Firms are using their resources to form core competencies and implement an international strategy as a means of overcoming the advantages created by traditional resources.
• the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context

  global mind-set
• Using a global mind-set to analyze the internal organization help the firm to outperform rivals.
• evaluators should examine the firm’s entire portfolio of resources and capabilities
• individual firms possess at least some resources and capabilities that other companies do not—at least not in the same combination
• Resources are the source of capabilities, some of which lead to the development of core competencies; in turn, some core competencies may lead to a competitive advantage for the firm.
• Components of an Internal Organization

  resources ->

  capabilities ->

  core competencies ->

  discovering core competencies ->

  competitive advantage ->

  strategic competitiveness
• Components of an Internal Analysis

  resources can be:

  • tangible
  • intangible
• Components of an Internal Analysis (discovering core competencies)

  FOUR CRITERIA OF SUSTAINABLE ADVANTAGES

  • Valuable
  • Rare
  • Costly to imitate
  • Nonsubstitutable
• Components of Internal Analysis (discovering core competencies)

  VALUE CHAIN ANALYSIS

  • Outsource