Introduction
The process of identifying the internal environment is crucial for the operation within the business
environment. An evaluation of internal capabilities is needed for the successful operation of an
organization in it’s competitive atmosphere. This paper will identify some methods in assessing the
internal environment, the sources of power, and the decision model that is crucial for
understanding the internal environment.
Process
The process of assessing the internal environment begins with identifying the organization's
strengths and weaknesses (Gamble, Peteraf, & Thompson, 2021). This task is usually performed
by top and middle managers who invoke an assessment of the internal capabilities of the
organization. Usually, organizations assess their internal capabilities if the need for competitive
advantage has stagnated and innovation is lacking (Kuratko, Hornsby, & Covin, 2014).
Next, employee empowerment through increased autonomy and direction satisfies the
organizational demand for additional innovation and corporate entrepreneurship. This process is
initiated by top management and fulfills corporate entrepreneurial endeavours which leads to
increased innovation by employees without the need for a corporate research &
development department etata, Sofka, & Grimpe. 2015). Innovation by employees may be more (K
crucial due to their increased interaction with their primary customers, either business to business
or business to consumer.
This section addressed innovation on behalf of the organization when conducting an internal
assessment of the organizational environment. The rationale of assessing innovation is that
innovation within organizations allows for the organization to gain and sustain competitive
advantages within the marketplace. If an organization ceases to be innovative, they will likely lose
their competitive advantage and thus b e stagnant in the marketplace and thus lose profitability.
Strategic Thinking
A source of power in assessing the internal environment within an organization is to improve
internally performed value chain activities. This can be done with top management’s support and
an assessment of the processes that make up the entire value chain within an organization. There
are many methods that managers may use to improve strategic thinking within an organization.
Implementing the use of best practices, as outlined by industry standards, may be of significant
importance to managers. These would increase the cost-effectiveness by reducing the costs of
high-cost activities.
Next, eliminating cost producing activities may substantially benefit organizations that are
hemorrhaging cash. Elimination or re of high cost activities would substantially benefit assignment
organizations particularly those who desire to be competitive within highly competitive industries.
Outsourcing high cost activities, such as customer service, to other organizations may be of
significant advantages to many organizations who try to cut costs to remain competitive.
In assessing the strengths and weaknesses of organizations, many of these processes and
decisions will be identified and those strengths may be capitalized upon and the weaknesses
improved. It’s up to managers to listen to employees and identify those costs that are substantially
ineffective or considered a weakness within the organization.
Decision Model
One of the single most critical tools in developing an understanding of oneself is the SWOT
analysis. A SWOT allows organizations to identify internal strengths and weaknesses as well as
external threats and opport ies. For the purpose of this paper, only the internal strengths and unit
weaknesses will be looked upon. Strengths are what an organization does well. Weaknesses are
what an organization does not perform well. Therefore, it’s imperative that an organization
capitalize upon what they perform well and are aware of what they do not. In this awareness
organizations may either choose to improve upon those weaknesses or continue to allow for them
to be weaknesses for the sake of continuously capitalizing on strengths (Krogerus, Tschappeler,
Piening, & Earnhart, 2017).
Conclusion
Assessment of the organztions’ internal environment is a crucial component of maintaining a
competitive advantage within an industry. Understanding what an organization performs well and
what they are sorely lacking is vital to improving upon existing processes and cutting the losses of
those processes that are losing. Innovation is also a crucial component of the internal process
insofar that innovation helps to gain and maintain a competitive advantage.
