Student Self-administered case study The internal environment ‐ THE STARTING POINT FOR STRATEGY FORMULATION Case summary: Case duration (Min): Strategic Management (SM) Organizational Behaviour (OB) The internal environment Organization culture 45-60 Worldwide Business success can be realized by focussing on the organization, rather than the external business environment. Aside from a need to be aware of the external environment, the manager must also know the internal business environment –managers need to understand the strengths ad weaknesses of their organizations; they need to leverage resources. In order to do this they must know what they are and how they contribute to value creation and goal attainment. There …show more content…
Evaluate whether corporate success depends upon positioning an organisation in a favourable market environment or on unique resources. Should strategies be developed by looking outward to the external business environment or should they be developed by looking inward to the organizations resources? During 4 5 ORGANISATIONAL RESOURCES In the film clip, CEO John Melo discusses capabilities and what the organization can or could do. List and discuss resources and distinguish between resources and the capabilities of the organisation During CAPABILITIES: IDENTIFICATION AND EVALUATION Discuss how organizations might identify and evaluate key resources and capabilities During Page 3 Case media Stanford 's Entrepreneurship Corner - Case study © Dr Phil Kelly 2009 Answers... INTERNAL ENVIRONMENT Relates to the culture and climate of an organisation and to the prevailing atmosphere surrounding the organisation. CAPABILITIES A company’s distinctive competencies to do something well and efficiently DYNAMIC CAPABILITIES the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments ORGANISATIONAL CLIMATE Relating to the prevailing atmosphere surrounding the organisation, to the level of morale, and to the strength of feelings or belonging, care and goodwill among members.
These factors create certain expectations and requirements for organizations, which in turns determine the organization's direction and strategy. Whereas internal environment is made-up of several internal subsystems. Internal subsystems work together systematically and drive the organization in the direction which is in conformity to external environment demands; thereby making the organization effective and a good fit with external environment. (McShane & Steen, 2012, p.6)
An organization’s external environment is terribly important and must be studied and understood for the organization to truly succeed. Through such study and understanding, a manager would be able “mitigate threats and leverage opportunities” that are caused by the six segments identified as macro-level external forces: (1) political, (2) economic, (3) sociocultural, (4) technological, (5) ecological, and (6) legal (Rothaermel, 2013, pp. 56-57). Since the manager’s decisions, or firm effects, have a greater impact than those external forces mentioned only when the manager accounts for them and builds a strategy around them, the manager must be aware of and understand these forces to be
When manipulating a business’s strategy, it is important to focus on the external factors in the environment. An external analysis is where a business conducts environmental scanning that present a company with the key external forces influencing the organization. The facets of external forces examined are the business environment, remote environment, or the competitive environment. A business environment is all of the external factors in the general environment that a firm cannot control, but can affect their strategy. The remote environment is the forces that affect most firms. Lastly, a competitive environment is the firm’s specific industry and its entirety. The external analysis is pertinent to a company called Dick’s Drive- In; without it, Dick’s would not be a thriving popular business today.
Analyze the external and internal environment for opportunities, threats, strengths, and weaknesses that impact the firm’s competitiveness.
Strengths and weaknesses come from the internal environment of the firm. Strengths can be exploited, built upon and made key to accomplishment of mission and objectives. Strengths reflect past accomplishments in production, financial, marketing and human resource management. Weaknesses are internal characteristics that have the potential to limit accomplishment of mission and objectives. Weaknesses may be so important that they need to be addressed before any further strategic planning steps are taken. A basic determination of a firm's relative strengths and weaknesses is often the first step in the internal evaluation. A hidden benefit in internal evaluations is the opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization. A manager's forced communications that occur across departmental lines produces an additional benefit in improving communication within the organization.
2. Capabilities - can be defined as 1) organizational capabilities – the network of organizational routines and processes that determine how efficiently and effectively the organization transforms its inputs (resources) into outputs (products including physical goods and services) and 2) dynamic capabilities – an organizations ability to build, integrate and reconfigure capabilities to address rapidly changing environments.
Individual Assignment 1: Using a company that you are familiar with, explain how factors in the external business environment influence marketing strategies and outcomes
I think it is important to assess the environment opportunities associating them to the strengths and weaknesses of the organisation resources.
Internal environment are SW which stands for strength and weakness, actually analysis of internal organization and external environment OT stands f opportunities and threats
Sustained competitive success requires continuous sensing, seizing, and transforming in order to overcome the challenges that changing customers, competitors and technologies brings (Teece, 2014). Such changes in the environment of the company usually occur over time. This means that while making the transition companies in such industries have to maintain certain former core competencies while building up new ones. The core competencies are defined as a combination of tangible and intangible resources and skill which distinguishes the company from other market players. The concept of core competencies foresees that
Grant (2010) states, “For a strategy to be successful, it must be consistent with the firm’s external environment, and with its internal environment – its goals and values, resources and capabilities, and structure and systems.” (Grant, 2010, p.13).
It is defined as all the forces or conditions that are available within an environment that affects an organization and business. It is also known as controllable factors because business can control them. The internal environment deals with the management of resources like human resources, physical resources, technology, monetary resources and others that constitute the organization in order to implement or execute a strategy. Internal environment also includes culture and other intangible aspects like teamwork, coordination, efficiency level of employees, employee’s salaries and monitoring costs. The strategy for competition should also be in sync with the internal resources especially the internal environment.
1) Barney, J., (1991). Firm Resources and Sustained Competitive Advantage, Journal of Management, vol. 17 (1991), no. 1, pp. 99–120.
The internal environment consists of the inherent competencies of the firm and the structure of its internal systems and processes. It is imperative for the organization to conduct an internal analysis
The internal business environment includes factors within the organisation that impact the approach and success of the business operations. Formerly presented as core competencies, capabilities, leadership style and culture of an organisation. To understand its sources of competitive advantage from within a firm or an organisation will implement specific tools such as SWOT analysis (Strength, Weaknesses Opportunities and Threats), Value chain analysis, Resource based view, VRIO framework and BCG Matrix for instance.