The strategic analysis of the firm we consider the objective conditions which exist within the organization. The assessment of the internal position is of importance in evaluating the enterprise’s capabilities in the light of its resources. So we should be in a situation to judge the organization’s capability in view of its resource profile, and as a consequence of our external appraisal, to decide what it ought to be doing considering the environment in which it is operating.
For the internal analysis to be effective, the process must be underpinned by a strategic view, preferably in a creative manner, which will allow multidimensional insights to be obtained. In the process of strategy-formulation the objective of internal appraisal is to produce a picture of the organization, its resources and capabilities which provides a segmented and integrated internal perspective of the strengths and weaknesses of the firm as a whole.
Our model of the strategy-formulation process indicated the importance of the impact of the present situation in which the enterprise finds itself. We argued then that not only was the current position a result of past decisions but also that it represents a starting point for analysis. Therefore, to determine the current position involves consideration of the firm’s resources, the business the firm is in, what its objectives are, and how well it achieves them. The results of this analysis are crucial elements in determining the firm’s future strategy.
Further, internal appraisal not only indicates what resources the firm has but also evaluates how well they have been used by management.
This may also lead to a judgement on how well resources may be used in the future by the same management. The scope of internal analysis is more than just identifying and tabulating the organization’s resources. It involves appraising management’s utilization of resources