College of Business, Hospitality and Tourism Studies

DEPARTMENT OF MANAGEMENT, IR & HRM

MGT703 STRATEGIC
MANAGEMENT
TUTORIAL 2(B) THE INTERNAL
ENVIRONMENT

Groups Members
Neha Nasheen Ali 2017144055

Raisha Khan 2016133911

Komal Reddy 2017142195

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QUESTIONS
1. Name and discuss on the two major elements of the Internal
Environment of a firm.
Labour and Management Relationship
Promoter’s vision

2. Identify and discuss the components of internal analysis and explain the
need for firms to study and understand the internal environment.
 Resources are the tangible or intangible assets of an organization
essential for its activities and processes. They can either be outsourced
or internally generated.
 Capabilities are the industry-specific skills, organizational knowledge or
the relationships which are usually intangible in nature and can be
generated through internal activities. Some competencies are unique
to a specific organization in which they excel and these are called as
their core competencies and are responsible for their competitive
advantage.
 The resources generate the capabilities which in turn generate the core
competencies which in turn give the value addition to the consumer
market.
 The configuration of the organization is associated with the places
where the organization’s activities in the value chain are performed
while coordination is associated with the management of these
activities. The configuration can either be a concentration meaning
activities limited to a specific geography or dispersion meaning that the
activities are spread across a large number of locations. Co-ordination
can be either internal or external in nature. Internal coordination refers
to the value-adding activities while external coordination refers to the
suppliers-channels-customers linkages.

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 The organizational structure must be so designed that the business
must accomplish its objectives effectively and efficiently while the
culture determines the magnitude of this accomplishment.
 Finally the performance of the organization is analyzed using a
portfolio analysis which gives the evaluation on the organization’s
range of products.
An internal analysis is an exploration of your organization’s competency,
cost position and competitive viability in the marketplace. Conducting an
internal analysis often incorporates measures that provide useful
information about your organization’s strengths, weakness, opportunities
and threats – a SWOT analysis. The data generated by an internal analysis
is important because you can use it to develop strategic planning
objectives to sustain and grow your business.

3. Discuss how a sustainable competitive advantage of a firm can be

achieved.
New products and markets are continuously being created disrupting
the traditional offerings. To succeed in this environment, your business
needs to shake up the status quo and avoid competing in exactly the
same way as your rivals.

4. Define ‘value’ and discuss the importance of creating value.

Value- the regard that something is held to deserve; the importance,
worth, or usefulness of something.
Our values are important because they help us to grow and develop.
They help us to create the future we want to experience.
Every individual and every organization is involved in making hundreds
of decisions every day. The decisions we make are a reflection of our
values and beliefs, and they are always directed towards a specific
purpose. That purpose is the satisfaction of our individual or collective
(organizational) needs
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5. Critically discuss on the challenges of internal analysis by Managers or
Executives.
Managers’ strategic decisions about resources, capabilities and core
competencies are non-routine and have ethical and competitive
implications.
Managers must have:
 Courage
 self-confidence
 integrity
 the capacity to deal with uncertainty and complexity
 Willingness to hold themselves and other people accountable for their
work.

6. Discuss three conditions or situations affecting strategic managerial

decisions.
Programmed versus Non-programmed Decisions
Programmed decisions are made in predictable circumstances and
managers have clear parameters and criteria. Problems are well
structured and alternatives are well defined. The problems are solved and
decisions are implemented through established policy directives, rules
and procedures.
Non-programmed decisions are made in unique circumstances and the
results of such decisions are often unpredictable. Managers face ill-
structured problems. These problems require a custom-mode response
and are usually handled by the top management. To start a new business,
to merge with another business or to close a plant are all examples of
non-programmed decisions. For example, when Steven Jobs and Stephen
Wozniak introduced the first Apple microcomputer in 1978, they were not
certain about the market for it. Today, Apple Macintosh computer is a
major competitor to IBM computers.

Information Inputs
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It is very important to have adequate and accurate information about the
situation for decision making, otherwise the quality of the decision will
suffer. It must be recognized, however, that on individual has certain
mental constraints, which limit the amount of information that he can
adequately handle. Less information is as dangerous as too much
information. Some highly authoritative individuals do make decisions on
the basis of comparatively less information when compared to more
conservative decision makers.

Prejudice
Prejudice and bias is introduced in our decisions by our perceptual
processes and may cause us to make ineffective decisions. First,
perception is highly selective, which means that we only accept what we
want to accept and hence only such type of information filters down to
our senses.

7. Identify and discuss four tangible resources and three intangible

resources firms must have.
Tangible

Intangible

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8. Differentiate between a firms, resources, capabilities, and core
competencies.Criticall Discuss how a firm can build or develop on its
core competencies.
Resources -are inputs into a firm’s production process. Are the source
of a firm’s capability? Cover a spectrum of individual, social and
organizational phenomena.
Capabilities- are the firm’s capacity to deploy resources that have been
purposely integrated to achieve a desired end state. Are often based
on developing, carrying and exchanging information and knowledge
through the firm’s human capital. Are often developed in specific
functional areas, such as R&D and marketing.
Core competencies -are capabilities that serve as a source of
competitive advantage for a firm over its rivals. Distinguish the firm
competitively and give it a unique identity. Emerge over time through
an organizational process of accumulating and learning how to deploy
different resources and capabilities
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9. Describe four criteria used to determine whether resources and
capabilities are core competencies.

10.Define value chain analysis. Explain how value chain analysis is used to
identify and evaluate resources and capabilities.
Value chain analysis allows the firm to understand the parts of its
operations that create value and those that do not. It helps managers to
understand a firm’s cost position. The value chain is segmented into
primary and support activities.

The firm that competes through differentiation advantage will try to

perform its activities better than competitors would do. If it competes
through cost advantage, it will try to perform internal activities at
lower costs than competitors would do. When a company is capable of
producing goods at lower costs than the market price or to provide
superior products, it earns profits.

11.Define outsourcing and discuss the reasons for its use.

Outsourcing is the purchase of a value-creating activity from an
external supplier. A firm cannot possess the resources and capabilities
it requires to achieve competitive superiority.

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 By outsourcing non-core functions a firm can concentrate on those
areas in which it can create value specialty suppliers can perform
outsourced capabilities more efficiently.
Reasons for its use:
 The main reason for outsourcing is that few firms possess the
resources and capabilities to achieve competitive superiority in all
primary and support activities.
 When outsourcing, a firm seeks the greatest value from another firm.
Preferably the supplier has core competency in the primary or support
activities outsourced.