Internal Environmental Analysis

TASK: 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 their positions in a competitive market.
You 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.
How to setup:
I. Introduction – provides the reader with a quick overview of the focal company and an overview of the main points. It is a good idea to write this section LAST to ensure all main points are covered.
II. 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.
1. Corporate Level Strategies – Perform an analysis on the focal company’s corporate-level strategies, using outside research to identify the strategies and using course materials for support of your analysis.

2. Partial SWOT – Create a partial SWOT table (SW portion) and cite sources from the outside research to support your table. This sections is a Matrix or Table only, and not an analysis.

3. SW Analysis – Perform a SW analysis of your SW Matrix/Table 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. Use course materials for support.

4. IFE Matrix Analysis – Create an IFE matrix analysis. Make sure to explain how the matrix was developed and discuss the strategic inferences/implications, using course materials for support.

5. Grand Strategy Matrix – Develop a Grand Strategy Matrix. (See Dr. Kathy’s Notes for Week Five for guidance on this matrix. IMPORTANT: as indicated in Dr. Kathy’s Notes for Week Five, use the 2019 and 2018 industry growth rates. 2020 growth rates may be an anomaly and may give you unrealistic measurements.) Make sure to explain how the matrix was developed and discuss the strategic inferences/implications at a corporate level and business-unit-level using course materials to support your explanation.

III. Strategic Role of Internal Resources/Departments/Processes
1. Business Level Strategies – In this section, you will perform an analysis on the focal company’s business-level strategies. Robust support from course materials is also expected for this section.

a. Product Line and Target Market – Evaluate the company’s product line and target market.
b. Business-Level Strategies – Identify and explain business-level strategies.
2. Functional Level Strategies – In this section, you will perform an analysis on the focal company’s functional-level strategies. You will obtain most of this information from the company’s website, Annual Report or 10K Report. Robust support from course materials is also expected for this section.

a. Org. Structure, Culture, Etc. – Assess the organizational structure, the organizational culture, marketing production, operations, finance and accounting, and R&D. This can be accomplished by viewing the company’s website, interviews, and surveys.
b. Alignment – Explain how these strategies align with the company’s vision and mission statements.
IV. Strategic Financial Analysis for the Last Reported Fiscal Year
1. Financial Ratios for Company – 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.
a. Leverage Ratios (Long term debt ratio, Total debt ratio, Debt-to-equity ratio, Times interest earned ratio, and Cash coverage ratio).
b. Liquidity Ratios (Net working capital to total assets ratio, current ratio, quick ratio, and cash ratio)
c. Efficiency Ratios (Asset turnover ratio, Average collection period, Inventory turnover ratio, and Days sales outstanding)
d. 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.)
2. Average Financial Ratios for Industry – Quote industry financial average ratios that correlate to the 10 financial ratios selected for the focal company.
3. Financial Analysis – 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: Consider using the library to find the industry averages. A UMGC librarian can assist if you have difficulty finding. 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.
V. Composite Analysis
A composite analysis is a summary analysis that you will create. The composite analysis should use the most relevant factors from all of the various analyses in Projects 1, 2, and 3 (Financial Ratios, EFE Matrix, IFE matrix, CPM matrix, SWOT, and Grand Strategy Matrix). This summary will include a QUANTITATIVE summary (most important points from the Financial Ratios), and a QUALITATIVE summary (most important points from the Matrices).
1. Quantitative Composite Analysis – Develop a composite analysis on internal factor strategy analysis based on the most relevant quantitative analytical outcomes from financial ratios. Quantitative outcomes will largely stem from the Financial Analyses in Section IV.3 above. Robust support from course materials is expected for this section. The key to this composite analysis is identifying the most relevant factors. The Quantitative outcomes should not simply be a repeat of the Financial Analysis in section IV, for example. This section should contain a few key points stemming from the ratios that you want the leaders of this company to pay attention to.
2. Qualitative Composite Analysis – Develop a composite analysis on internal factor strategy analysis based on the most relevant qualitative analytical outcomes from those steps above and from the following (may be from previous projects): EFE Matrix, IFE matrix, CPM matrix, SWOT, and Grand Strategy Matrix. Qualitative outcomes will come from your matrices. Robust support from course materials is expected for this section. The key to this composite analysis is identifying the most relevant factors identified in your various matrix analyses so far. This section should contain a few key points that you want the leaders of this company to pay attention to.
VI. Conclusion – Create a concluding paragraph. This is, in essence, an Executive Summary. The Conclusion is intended to emphasize the purpose/significance of the analysis, emphasize the significance/consequence of findings, and indicate the wider applications that are derived from the main points of the project’s requirements. You will draw conclusions about the findings of the internal analysis.
References – The reference page is on a separate page from the report. The reference page is completed according to APA with each reference left-justified with hanging indentation for subsequent lines. References are completed in alphabetical order. Please see the module, “Learn to Use APA” to ensure references are in APA format.

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