Question

Briefly discuss why Internal Organizational Analysis is important. Then briefly discuss how the ultimate product of it is used with the ultimate product of External Analysis to give an inside/outside picture of the firm and its environment. (Hint: there is a third analysis technique you will need to mention and describe in your answer.)

Answer 1

Internal analysis or SWOT analysis is very important for any organisation to know about its internal strength or weakness is. Type of analysis provide adequate level of information regarding a company and increases its chances for improvement.

SWOT is an acronym for strength, Weakness , Opportunities and threats.

It can be further described as follows.

Strength

To measure the overall strength and strong points of the company SWOT analysis is carried out. Strength section provide information about the strong parts and operating sections of the company which is beneficial to learn for creating a competitive advantage.

Weaknesses

By determining a company's weaknesses we can easily improve the same which would definitely help in maintaining the competitive advantage for the company. Successful assessment of the weaknesses of a company directly increases you are a level of strategy design to improve the situation.

Oppertunities.

Assessment of the opportunities is very essential for any organization to determine the future availability of the future possibilities of the different aspects of the development for the organization.

Threats

Knowing threats for any organization is important as its the only way an organization can improve its situation in the market and can develop their future strategies accordingly.

Porter's five forces analysis is a very useful methodology to analyse the external environment effect on any organisation or industry. By applying the external five forces we can easily determine the after effects of those forces on the specific organisation.

External analysis is also very important for any organisation as it directly provides information or analysis regarding external factors that are affecting the organisation in an external manner as well as creating an effective approach of service distribution or defect at the respective environment of operation for the specific company.

Five forces of porter's analysis are as follows.

Competition rivalry

Knowing the competetion is very essential for any organisation to maintain their causative and image and to provide innovative solutions for maintaining the competition and to provide an advantage over different competitors.

Supplier Bargaining

Supplier bargaining capability are also analysed in porter's five forces analysis. This definitely helps the company to initiate the specific budget and to maintain the overall expenses and keeping a track of their financial status.

Customer bargaining

Customer bargaining is also a very major part of any organisation which directly relates to sell their services. As a part of bargaining, maintenance of the profit as well as overall value generation is done.

Threat of new entrants

Threat of new entrants if one of the most prominent problems for most of the organisations which is analysed in porter's five forces analysis. By analysing new entrance, strategic management for overcoming the specific newer organisation can be easily done.

Substitute threats

Rectification of the thread regarding substitution and arranging the best available strategy for the products with which the customer does not move to other brands is very essential and analysing porter's five forces analysis.