Internal environment
(part 4)
Micro Environment-Techniques used to identify and analyse
challenges in the mirco-environment.
Porter’s Six Forces Model
P2E2STLE Analysis
ENVIRONMENTAL SCAN
Different models/tools Marko
that organisations
Market
SWOT Analysis
can use to analyse
M
Micro
the internal business
environment.
Resource-Based
Value- chain analysis Balanced Scorecard
analysis
Scanning the Internal Environment
In an ever-changing environment resulting from but not limited to the advancement in technologies,
ever-growing innovations as in the culture of work, businesses have become highly competitive .
Today every company’s ultimate goal is to remain relevant during continually changing market trends
by creating value for their customers.
According to Venter and Botha (2019) strategy formulation originally included an external focus
specifically on the market. However, attention shifted towards the internal strengths , resources and
capabilities of an organisation.
Below are three models that managers can use to analyse the internal strengths and weaknesses an
organisation
Resource- Based Value-Chain Analysis Balanced Scorecard
Approach
[Link]- Based Approach
The Resource-based view (RBV) is a model used to analyse the internal environment of the
organisation in order to identify its internal strengths and weaknesses.
1. The Resource-based view (RBV) is a model used to analyse the internal environment of the
organisation in order to identify its internal strengths and weaknesses with respect to its
resources.
2. The purpose of the tool is to assess the value of each resource and identify how (a strategy) that
resource would be used to build a competitive advantage, superior performance and customer
value.
It is important that you do not get confused between the RBV and SWOT analysis
RBV is a useful strategic tool used by management to determine whether a RESOURCE is a
strength or weakness and formulate strategies to exploit the strengths and counter the
weaknesses.
2. Value Chain Analysis
Value Chain Analysis
The purpose of the tool is to identify where value is created. Management can do this by
analyzing the inputs of activities and raw materials in such a way that it adds value to
the output and gives a competitive advantage
In a business environment, the concept of adding value for the customer should be the aim,
because a business needs satisfied customers to be successful.
Value chain analysis is a way to visually analyse a company's business activities to see how
the company can create a competitive advantage for itself.
Value chain analysis helps a company understand how it adds value to something and
subsequently how it can sell its product or service for more than the cost of adding the
value, thereby generating a profit margin.
If one keeps in mind that there are internal customers (co-workers or the boss) and external
customers, it is important to look at the entire business process to decide where value is
added in a cost-effective manner to enhance the quality of the product or service rendered.
It has been recognized that if a business is involved in something that is not its core
business strength, that particular activity will probably not add value to the business
process. In a case like this, it may be better to outsource the service.
3. Balanced Scorecard (BSC)
A strategic management tool used to assess the performance of the
business.
The tool was developed by Kaplan and Norton
The tool is can be used by management to get a quick but
comprehensive (Broad range) understanding of the overall
performance of the business.
It does this by looking at the inter-relationship between different
VARIABLES which can be MEASURED.
The BSC forces management to look at a variety of important issues that impact on the business performance.
The BSC has four focus points :
Financial Perspective Customer Perspective
Internal business processes Perspective Learning and growth perspective