INTERNAL ENVIRONMENT

Key areas
1. A) Organizational resources: resource based
theory of strategy proposed by Barney (1991)
. Resources tangible & intangible
. Physical resources
. Human resources
. Organizational resources
. Resources will provide strategic advantage if they
possess 4 characteristics valuable, rare, costly to
imitate and non substitutable.
. Theory focuses on efficiency of resource utilization
Difficult to acquire these resources
Organizational success depends upon the cost &
availability of these resources
Mere availability would not suffice

Key areas
1 b) Organizational Behaviour - is the
demonstration of the various forces and
influences operating in the internal
environment of an organization that
creates the ability for, or place
constraints on, the usage of resources.
The resources (hard side) + behaviour
(soft side) collectively produce strengths
and the weaknesses of an organization.

Key areas: 2 Strengths &

Weaknesses
Strengths and weaknesses do not
exist in isolation but combine within
a functional area, and also across
different functional areas, to create
synergistic effects

Key area 3 - Synergistic

effects
In effect, we have a situation where attributes
do not add mathematically, but combine to
produce an enhanced or a reduced impact. Such
a phenomena is known as the synergistic
effect
Example a high marketing synergy
Synergy - + or
Synergistic
effects
are
an
important
determinant of the quality and type of an
internal
environment
may
lead
to
competitiveness.

Key area 4: Competencies

Special
qualities
possessed
by
an
organization
that
make
them
face
pressures of competition in the market
place.
Core competencies
Distinctive competencies - exclusively, or
in a relatively large measure; refers to a
set of activities or capabilities that a
company is able to perform better than its
competitors and which gives it an
advantage over them.

Distinctive competence
Changes over time
Concept by Philip Sleznick, 1957;
elaborated by Kenneth R Andrews, 1971
Vary from organization to organization
Example Toyota lean production system
C.K. Prahlad - core competences must
satisfy two additional criteria difficult to
replicate; provide competitive advantage
over multiple products / markets.

Key 5: Organizational
Capability
Organizational capability is the inherent
capacity or potential of an organization
to use its strengths and overcome its
weaknesses
in
order
to
exploit
opportunities and face threats in its
external environment.
Without capability, resources worthless.
a measurable but subjective attribute.

Key 6: Strategic Advantage

Outcome
of
organizational
capabilities leading to rewards
Profitability could be used to
measure strategic advantage
More
common

competitive
advantage