Mgmt 670 Week 3: Internal Aspects Of A Business

Mgmt 670 Week 3lectureweek 3 Internal Aspects Of A Business The S

MGMT 670: Week 3 Lecture Week 3: Internal Aspects of a Business: The students will study, in detail, the internal environment of companies. They will analyze the strengths and the weaknesses facing a business, using a SWOT analysis. They will learn what the Resource-Based View is and how to calculate it. They will analyze a company’s value chain. Learning Objectives: Evaluate an organization’s internal capabilities and competences (private, public, and nonprofit organizations).

Describe what is meant by the core competencies of a business. Explain what RBV is used for and how to calculate it. Evaluate a company’s strengths and weaknesses, using a SWOT. Explain what value chain analysis is used for and how to perform one. Introduction This week, we’ll be looking at a company’s internal resources to see how well its current strategy is working.

When deciding whether a strategy is working, we look at whether the company is recording gains in financial strength and profitability, and whether the company’s competitive strength and market standing are improving. Indicators of how well a company’s strategy is working include Trends in the company’s sales and earnings growth and stock price The company’s overall financial strength The company’s customer retention rate and the rate at which new customers are acquired Changes in the company’s image and reputation with customers Improvement in internal processes Resource and Capability Analysis The company’s business model and strategy must match its resources and capabilities. Therefore, any evaluation of the company’s internal factors must include resource and capability analysis.

Such an analysis involves first identifying the available resources and capabilities (its core competencies) and then deciding whether they support a competitive advantage over rival firms (“Developing strategy through internal analysis,” 2010). A resource is “An economic or productive factor required to accomplish an activity, or as means to undertake an enterprise and achieve desired outcome” (“Resource,” 2016). A capability is the capacity of a firm to competently perform some internal activity. “A firm's resources and capabilities include all of the financial, physical, human, and organizational assets used by a firm to develop, manufacture, and deliver products or services to its customers” (Barney, 1995, p. 50). Tangible resources are assets that can be seen and quantified. Production equipment, manufacturing plants, and formal reporting structures are examples of tangible resources. Intangible resources typically include assets that are rooted deeply in the firm’s history and have accumulated over time. Because they are embedded in unique patterns of routines, intangible resources are relatively difficult for competitors to analyze and imitate.

Knowledge, trust between managers and employees, ideas, the capacity for innovation, managerial capabilities, organizational routines (the unique ways people work together), scientific capabilities, and the firm’s reputation for its goods or services and how it interacts with people (such as employees, customers, and suppliers) are all examples of intangible resources (“Developing strategy through internal analysis,” 2010). Resource-Based View The resource-based view (RBV) is a model that sees resources as key to superior firm performance. The RBV “of strategy holds company assets as the primary input for overall strategic planning, emphasizing the way in which competitive advantage can be derived via rare resource combinations” (“The resource-based view,” 2016).

If a resource exhibits VRIO (valuable, rare, imitatable, organization) attributes, the resource enables the firm to gain and sustain competitive advantage. Use the VRIO test (Barney, 1995; Jurevicius, 2013) by asking these four questions: “Do a firm's resources and capabilities add value by enabling it to exploit opportunities and/or neutralize threats?” (Barney, 1995, p. 50). “How many competing firms already possess these valuable resources and capabilities?” (Barney, 1995, p. 52), Or, how rare are they? “Do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it?” (Barney, 1995, p. 53). Or, how easily is the resource imitated? “Is a firm organized to exploit the full competitive potential of its resources and capabilities?” (Barney, 1995, p. 56).

Complete an analysis of the key internal factors that have implications for successful implementation of your organization’s strategy and goals/objectives. Submit your work in your assignment folder in the form of an approximate 2,000-word double-spaced APA-formatted paper. The title page, reference list, and any appendices are not included in this suggested word count. You do not need to include an abstract. Your paper should address these topics: Given the company’s Vision, Mission and Objectives (VMO), identify the company’s core competencies and assess which ones are rare, costly, or not easily imitated.

Discuss how they are related to and critical to the VMO execution. Present a summary of your organization's strengths and weaknesses. Submit the SWOT format in Table form and add in some narrative to discuss the strengths and weaknesses in more detail. Explain in your discussion (not in the table) why you selected them and how they relate to the VMO and organization strategy. (Note: You will have an opportunity to complete a full SWOT analysis, including threats and opportunities, as part of your week 6 paper.)

Paper For Above instruction

The internal aspects of a business play a pivotal role in shaping its strategic direction and overall performance. Analyzing these internal factors enables organizations to leverage their strengths, address weaknesses, and align resources with strategic objectives. This paper examines internal capabilities through resources, core competencies, and value chain analysis, emphasizing their importance for strategy implementation within organizations. The discussion highlights how understanding and applying the Resource-Based View (RBV), SWOT analysis, and value chain analysis contribute to gaining competitive advantage and achieving mission and vision.

Central to internal analysis is the identification of resources and capabilities. Resources encompass tangible assets such as physical equipment, manufacturing facilities, and formal structures, as well as intangible assets like organizational routines, reputation, innovation capacity, intellectual property, and trust. These assets, especially intangible resources, are often embedded deeply within a firm's culture and history, making them difficult for competitors to replicate (Barney, 1991). Capabilities refer to a firm’s ability to deploy resources effectively to perform internal activities that support competitive advantage (Barney, 1991).

The Resource-Based View (RBV) posits that sustainable competitive advantage derives from possessing rare, valuable, inimitable, and well-organized resources. Applying the VRIO framework—valuable, rare, costly to imitate, and organized—helps organizations assess whether their resources can provide long-term advantages (Barney, 1995). Valuable resources enable exploitation of opportunities and neutralization of threats, while rarity indicates how unique those resources are among competitors. Additionally, the difficulty of imitation and proper organizational support are critical factors determining strategic strength.

For instance, a technology firm may possess proprietary algorithms that are valuable and rare, giving it a competitive edge. However, if these algorithms are easy to replicate or not well integrated into organizational processes, the advantage diminishes. Therefore, continuous investment in innovation and organizational capabilities is essential for maintaining a competitive advantage based on internal resources (Jurevicius, 2013).

Complementing resource and capability analysis, SWOT analysis offers a structured method to evaluate internal strengths and weaknesses. Strengths refer to internal capabilities that give the company a competitive edge, such as strong brand reputation, innovative product lines, and efficient supply chains. Weaknesses are internal limitations, including areas where competitors outperform the company or internal inefficiencies. For example, excessive operational costs or limited geographic presence could be weaknesses obstructing strategy execution.

Effective SWOT analysis links directly to organizational strategies and the firm's Vision, Mission, and Objectives (VMO). Strengths and weaknesses identified should support or hinder VMO achievement. For example, a core competency that is rare and costly to imitate may be essential for realizing strategic goals, while weaknesses such as high costs or outdated technology should be addressed to align internal capacity with strategic intent.

The value chain analysis further refines internal understanding by mapping activities involved in creating value for customers. Primary activities like inbound logistics, operations, outbound logistics, marketing, and sales, along with support activities such as firm infrastructure, human resource management, and technological development, reveal areas of strength and opportunities for efficiency improvements. A company with streamlined operations and strong supplier relationships can sustain competitive advantage, whereas inefficiencies in the value chain can erode margins.

In conclusion, internal analysis through resources, capabilities, SWOT, and value chain provides a comprehensive understanding of a firm's strategic internal environment. Aligning internal strengths with strategic objectives, addressing weaknesses, and safeguarding core competencies are fundamental for successful strategy implementation. Organizations that continuously evaluate and enhance their internal resources and capabilities position themselves better to respond to external threats and opportunities, ultimately leading to sustainable competitive advantage and achievement of their vision, mission, and objectives.

References

• Barney, J. (1991). Firm resources and sustainable competitive advantage. Journal of Management, 17(1), 99-120.
• Jurevicius, O. (2013). VRIO framework explained. Strategic Management Guide. https://strategicmanagementguide.com/vrio-framework
• Resource. (2016). In The Wiley Blackwell Encyclopedia of Management. John Wiley & Sons.
• Developing strategy through internal analysis. (2010). Strategic Management Literature.
• Barney, J. B. (1995). Looking inside for competitive advantage. The Academy of Management Executive, 9(4), 49-61.
• Jurevicius, O. (2013). VRIO framework explained. Strategic Management Guide. https://strategicmanagementguide.com/vrio-framework
• Jurevicius, O. (2013). VRIO framework explained. Strategic Management Guide. https://strategicmanagementguide.com/vrio-framework
• Developing strategy through internal analysis. (2010). Strategic Management Literature.
• Michael E. Porter. (1985). Competitive Advantage. Free Press.
• Thompson, A. A., Peteraf, M. A., & Gamble, J. E. (2018). Creating and Sustaining Competitive Advantage. McGraw-Hill Education.