Internal Strategic Analysis

Introduction and motivation

(Why learn this topic?)

When we studied external strategic analysis, we saw how useful a framework can be because it encourages us to carry out an analysis in a systematic way rather than relying on intuition, e.g. as we often do when using tools like the basic SWOT analysis. In this topic, we are going to build on this idea by looking at some tools that allow us to do a solid analysis of the strengths and weaknesses of a given business (i.e. the SW half of SWOT).

This topic is usually treated over two sessions, as described below under Learning Objectives, and relies on an excellent textbook chapter by two of the strategists who pioneered the use of these concepts.

Topic highlights

 (What will I learn in this topic?)
  • The basics of conducting an internal strategic analysis, including how to evaluate a firm's internal capabilities
  • The concept of a value chain and its importance in the strategic context
  • The resource-based-view (RBV) of the firm and how the so-called VRIO framework can be used to assess the competitive potential of a resource or capability
  • An introduction to how strategy might be derived from the internal analyses treated here

          (What kind of knowledge are we talking about here?)

  • As shown by the shaded region above this topic deals first with so-called "declarative knowledge", meaning that you are learning about the concept of internal strategic analysis
  • We also look at "procedural knowledge" when we consider the steps for carrying out such an analysis
  • Finally, we touch on "conditional knowledge" when we consider when, where and why to apply the things we learned about this type of strategic analysis

Learning activities

(How will we gain the required levels of understanding?)

Learning activities for class 1

 Type  Name
Reading before class
  • Read before class:
    • Evaluating a Firm's Internal Capabilities [in the course pack]
    • This is a high-level introduction to the concepts of internal resources and capabilities, the Resource-Based View (RVB) and the Value, Rarity, Inimitability and Organization (VRIO) Framework
In-class discussion and lecture
    • This discussion provides a brief introduction to the same concepts
 Instructor and
Personal learning activities
  • Start by reviewing what we did today
  • Then review the learning objectives below - can you answer the questions at a level you are comfortable with?

Learning activities for class 2

 Type  Name
  • TBA
  • We will have an in-class quiz on these concepts:
    • It will be based on one of the examples used in the reading, e.g. Electronic Arts, Dell, etc...
    • Be sure to review the learning objectives given below in this page
 Instructor and

Learning objectives

(How will I know I've learned it?)

 Level of understanding
 Objectives (presented as self-assessment questions)
 Very best
  • After having carried out an internal analysis, can I write a clear succinct summary of the analysis, including conclusions the implications for the business strategy?
 Highly satisfactory
  • Can I create a simple value chain for a general business case, i.e. for a business not studied in class?
  • Can I identify the resources and capabilities for a business?
  • Can I carry out a complete internal analysis for a situation not studied in class, e.g. using the value chain and VRIO tools?
  • Do I know how the internal analysis relates to strategy?
  • Do I understand the role that an internal analysis plays in the development of a suitable strategy?
    • How does it help?
    • What are it's limitations?
  • Do I understand how the concepts are applied in the examples used in the reading, e.g. Electronic Arts, Dell and others?
 Maybe just enough to pass
  • Do I know the difference between resources and capabilities?
  • Can I provide example of a firm's resources?
  • Can I name the components of the VRIO framework, e.g.
    • What do the letters V, R, I and O stand for and what do they mean?
  • Do I know why we use the VRIO framework?
  • Can I create a simplified value chain for a company?
Alex Bruton,
Oct 6, 2009, 12:16 PM