Internal analysis is a corporate evaluation. It deals with the evaluation of functional areas of the corporation. It locates functional capabilities of the organization in terms of strengths and weaknesses. The process of internal analysis includes following process;
- Strategic Intent Identification: First of all it is to be identified that the top level management of the organization is committed or not to attempt big, audacious and hairy goals in the organization. For this purpose it is essential to know and study the vision, mission and goals of the organization.
- Strengths and Weaknesses Analysis: Resource audit is the best way to assess strengths and weaknesses of the organization. A resource audit is a suitable starting point for considering the importance of an organization's internal environment. The audit itself is a highly skilled task and needs to be carried out by an experienced team of researchers. Strengths and weaknesses are determined by analyzing physical resources, human resources, financial resources and other intangible resources like good will, brand name, company image etc.
- Analysis of competencies: Assessing the organizations specialty and comparative strengths, is an analysis of competencies. The organization's competencies are determined by identifying unique resources and core competencies (detail is given in Unit 4). Following two factors are to be considered to analyze the competencies;
- Whether a competitor can acquire the competence by buying it, or by copying it.
- How long-lasting it is, which is linked to product life cycles - Finding the Strategic Advantages: If a company has a strategic advantage, it has a particular characteristic or way of doing things that makes it more successful than others. The term strategic advantage refers to such marketplace benefits that exert a decisive influence on the organization's probable future success.