Strategic Market Management, 10th Edition

CHAPTER SIX

Internal Analysis

We have met the enemy and he is us.

—Pogo

Self-conceit may lead to self-destruction.

—Aesop, “The Frog and the Ox”

The fish is last to know if it swims in water.

—Chinese proverb

Should the existing strategy be enhanced, expanded, altered, or replaced? Are existing assets and competencies adequate to win? An internal analysis of the business will help the strategist address these questions. This exploration is similar in scope to an analysis of a competitor or strategic group but much richer and deeper because of its importance to strategy and because much more information is available.

Just as strategy can be developed at the level of a business, a group of businesses, or the firm, internal analysis can also be conducted at each of these levels. Of course, analyses at different levels will differ from each other in emphasis and content, but their structure and thrust will be the same. The common goal is to identify organizational strengths, weaknesses, and constraints and, ultimately, to develop responsive strategies, either exploiting strengths or correcting or compensating for weaknesses.

Four aspects of internal analysis will be discussed in this chapter. The first, financial performance, provides an initial approximation as to how the business is doing. The second, an analysis of other performance dimensions such as customer satisfaction, product quality, brand association, relative cost, new products, and employee capability, can often provide ...