Internal analysis helps companies understand why differences in firm performance exist even within the same industry. Companies that compete in the
same industry face similar extemal opportunities and threats; therefore, any observable performance difference must be found inside the firm. In this
section you will study the internal resources, capabilities, core competencies, and value chain of the firm you have selected for this project.
- A good place to start with an intemal firm analysis is to catalog the assets a firm has. List the firm’s tangible assets. Then make a separate list of its
intangible assets. - Now extend beyond the asset base and use the VRIO framework to identify the competitive posi- tion held by your firm. Which, if any, of these
resources are helpful in sustaining the firm’s competitive advantage?
2 - 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.) - Perform a SWOT analysis for your firm. Remember that strengths and weaknesses (S, W) are internal to the firm, and opportunities and threats (O,
T) are external. Prioritize the strategic actions that you would recommend to your firm. Refer to the Implications for Strategic Leaders section on how
to conduct a SWOT analysis and provide recommendations building from strategic alternatives.
Competitive advantage leads to superior firm performance. To explain differences in firm performance and to derive strategic implications—including
new strategic initiatives—firms must understand how to measure and assess competitive advantage. In this section you will explore how your
company applies different frameworks to measure its performance. - Based on information in the annual reports or published on the firm’s website, summarize what the firm views as the reasons for its successes
{either past or expected in the future). Search for both quantitative and qualitative success factors provided in the report. - Does the firm seem most focused on accounting profitability, shareholder value creation, or economic value creation? Give quotes or information
from these sources to support your view. - Many firms are now including annual corporate social responsibility (CSR) reports on their web- sites. See whether your firm does so. If it does not,
are there other indications of a triple-bottom- line approach, including social and ecological elements, in the firm’s strategies?
Sample Solution
