An internal analysis leads to a realistic company profile, which is the determination of a firm's strategic competencies and weaknesses. It refers to the systematic study of strengths and weaknesses of a company which support to decide as to what extent a company is going to capitalize the opportunities and minimize the threats.
The internal analysis provides the means to identify the strengths to build on and the weaknesses to overcome while formulating strategies. The internal analysis process considers the firm's resources; the business the firm is in; its objectives, policies, and plans; and how well they were achieved. Various functions of the company are evaluated in the internal analysis process.
All organizations perform the functions of finance, production, marketing, and human resource development. For efficient strategic management, careful planning, execution, and coordination of these various functions is highly essential. Each of the functional areas has strengths or weaknesses depending on how the function is being managed. The joint performance of these functions will have a direct impact on the firm's performance in term of superior product design and quality, superior customer service, and superior speed.
Thus, internal analysis mainly focused on following topics of an organization internal environment;
- The size and power of the organization.
- The resources available.
- The way the organization is operated, i.e. its procedures and practices.
- Stakeholders' expectations.
- The organization's position in the marketplace.
- Whether the organization is a leader or follower.
- Whether the management is aggressive or not.