Internal Environmental Analysis

Project 3:  Internal Environmental Analysis 

Purpose:

This project is the third of four projects.  Students will perform an internal environmental analysis using the tools and concepts learned in the course to date.  You will also draw from previous business courses to develop an understanding of how organizations develop and manage strategies to establish, safeguard and sustain its position in a competitive market.

Students also have the opportunity to review an organization’s objectives and goals and the key functional areas within the organization.  Performing an internal environment analysis helps assess a firm’s internal resources and capabilities and plays a critical role in formulating strategy by identifying a firm’s strengths to capitalize on so that it can effectively overcome weaknesses.

Outcomes Met With This Project:

• utilize a set of useful analytical skills, tools, and techniques for analyzing a company strategically;
• integrate ideas, concepts, and theories from previously taken functional courses including, accounting, finance, market, business and human resource management;
• analyze and synthesize strengths, weaknesses, opportunities, and threats (SWOT) to generate, prioritize, and implement alternative strategies in order to revise a current plan or write a new plan and present a strategic plan

Step 4: Strategic Role of Corporate Strengths/Weaknesses in the Internal Strategy Analysis

There are three levels of strategy:  corporate level strategy, business level strategy and functional level strategy.  Corporate level strategies are related to businesses or markets the focal company successfully can compete within.  Corporate level strategies affect the entire organization and are formulated by top management using input from middle and lower management.  Decision making about corporate level strategies are considered complex, affect the entire company and relate to an organization’s resource capabilities.  Corporate level strategies align with an organization’s mission statement and ideally are designed around goals and objectives.

Perform an analysis on:

• Corporate-level strategies
• Create a partial SWOT table and performs a SW analysis and discuss the strategic inferences/implications (Discuss what strategies would allow the company to capitalize on its major strengths and what strategies would allow the company to improve upon its major weaknesses.)
• Create an IFE matrix analysis.  Make sure to explain how the matrix was developed and discuss the strategic inferences/implications
• Develop a Grand Strategy Matrix.  Make sure to explain how the matrix was developed and discuss the strategic inferences/implications at a corporate level and business-unit-level.

Step 5:  Strategic Role of Internal Resources/Departments/Processes

Perform an analysis on:

• Business-level strategies
  • Evaluate the company’s product line, target market
  • Identify and explain business-level strategies
• Functional-level strategies
  • Assess the company’s organizational structure, the organizational culture, marketing production, operations, finance and accounting, and R&D that can be accomplished by viewing the company’s website, interviews, and surveys.
  • Explain how these strategies align with the company’s vision and mission statements.

Step 6:  Strategic Financial Analysis for the Last Reported Fiscal Year 

• Use the company’s income statement and balance sheet to calculate no less than a total of ten (10) key financial ratios to the business that are relevant to the focal company.  There must be a mix of four different key categories inclusive of the leverage, liquidity, profitability, and efficiency ratios so that the ratios do not all come from the same category. The specific ratios selection must come from the following categories.
• Leverage Ratios (Long term debt ratio, Total debt ratio, Debt-to-equity ratio, Times interest earned ratio, and Cash coverage ratio).
• Liquidity Ratios (Net working capital to total assets ratio, current ratio, quick ratio, and cash ratio)
• Efficiency Ratios (Asset turnover ratio, Average collection period, Inventory turnover ratio, and Days sales outstanding)
• Profitability Ratios (Net profit margin, Return on assets, and Return on equity)
• The selection of the ratios has to be relevant to the focal company so it is important to choose wisely.
• Quote industry financial average ratios that correlate to the 10 financial ratios selected for the focal company.  You may find the industry averages by going to the library.  If you are unable to find on your own, reach out to the librarian as these resources are readily available.
• Discuss the corporate financial standing based on a financial ratio analysis.  Include whether the company’s financial ratio is a strength, a weakness or a neutral factor.

Note:  If copied directly from the Internet, a zero will be assigned. When placing any table or figure in a table, it must be explained in detail.

Step 7:  Composite Analysis

A composite analysis is one in which you will bring in a combination of relevant factors from the various analyses (EFE Matrix, IFE matrix, CPM matrix, SWOT, Grand Strategy Matrix and QSPM).  The QSPM is a tool that helps determine the relative attractiveness of feasible alternative strategies based on the external and internal key success factors.

• Develop a Quantitative Strategic Planning Matrix (QSPM) analysis.   Make sure to discuss how the matrix was developed and discuss the strategic inferences/implications.
• Develop a composite analysis on internal factor strategy analysis based on the qualitative and quantitative analytical outcomes from those steps above.