Internal Analysis : Resource To Determine Strength and Weakness

After determining the mission, vision and goals, the next process in creating the company's strategy is  internal and external analysis of the company.

Corporate Internal Analysis.

Internal Analysis.

Internal analysis company requires activity to evaluate company resource, the heterogeneous set of resources and managerial capabilities that can be established. From this perspective there will be several companies that have resources and capabilities that can not be owned by other companies. If the company faces such a situation, it will encourage a development core competence or competitive advantage of the company (Sofjan Assauri, 2013, p 47).

Internal company's analysis consists of:.

1. Strategic resource analysis.

2. Capabilities analysis.

3. Core competency analysis / VRINE model analysis/distinctive competency.

4. Value chain analysis.

1. Strategic Resource Analysis.

The strategic resources of an organization consist of physical assets, relative financial position, market position and brand position. In addition, strategic resources also include the capabilities of employees, specific knowledge, competencies, processes, skills and organizational culture aspects. All of the company's strategic resources are assets that can be developed by corporate strategic managers. (Sofjan Assauri, 2013, p.49).

The company resources can be classified into two:.

1. Tangible resources, tangible means can be seen and quantified with a simple method.

2. Intangible resources are resources that are difficult to quantify, deeply rooted in the company's history and have accumulated over time. Intangible resources are difficult to imitate and analyze by competitors.

A. Intangible strategic resources.

Strategic resources are tangible divided into two kinds.

1. Physical Assets.

Physical assets in this case are company facilities that support the company's operations, viewed from the position of physical asset location, position of service facility to consumer and or end user. Physical assets may not be able to provide good value if the location position is not strategic and does not contribute well in the company's operations.

2. Financial Condition.

Financial condition is a historical picture of the company's financial or corporate financial performance that can be seen from the company's financial statements. From these financial conditions can be studied whether there are advantages of financial condition. The advantages of the financial condition can be seen from the cash flow, the strong condition of the balance sheet position and the strength of the track record of finance. The Financial Review will determine the size of the company's competitive position which can simultaneously describe the company's marketing success and the company's ability to invest in the future.

There are many kinds of financial statement analysis, financial statement analysis applied in accordance with the needs of the highest decision holder, usually used as a tool to measure the financial condition is cash flow analysis, cash flow projections, financial statement analysis (vertical), financial statement analysis (horizontal) and du pont analysis.

B. Intangible strategic resources.

Intangible strategic resources are divided into four.

1. Knowledge.

Knowledge is specific skills of employees (experts in a particular field), skills, implimentation of corporate culture to employees, the process of training & education and leadership managers at every level. The role of knowledge is very important in establishing specific competencies to enhance competitive advantage

2. Corporate Culture.

Corporate culture is the paradigm, principles, mindset, action and behavior set by company's vision and mission to all employees while working, socializing to colleagues, customers, communities, journalists, governments and stakeholders. For example, corporate culture is "11 main behavior of PT Bank Mandiri (Persero), Tbk", motto of PT. HM Sampoerna, Tbk "Anggarda Paramita".

3. Intellectual Capital.

Example Intellectual capital are patents, corporate operational systems, corporate business strategies that are confidential to intellectual capital. Intellectual capital such as business systems and systems will be difficult to imitate by competitors due to different character of manager, management, financial ability and corporate culture.

4. Reputation.

Reputation accumulated since the company was founded and rooted into a corporate identity. Good reputation provides a good image and making easy to promote new products with well-known trademarks. For example Samsung Smartphone, having good reputation in after sell service, having better resale price and better durability, Samsung's reputation is well known in Indonesia as a quality smartphone.

Strategic Resources.

2. Capability Analysis.

Capability analysis is a company's ability to process and maximize its resources to produce products or services according to company goals. Capability analysis is analyzing company marketing capabilities, company operations and human resources to achieve corporate goals more efficiently and exceed share holder  expectation.

3 Analysis of Core Competencies / VRINE Models.

There are five key features or characteristics that determine whether resources or capabilities can help a company achieve superior performance while gaining competitive advantage. The five criteria are valuable, rarity, immitability, non-substitutability and exploitability (VRINE).

Valuable is a resource or capability that can be useful for a company to gain an optimal advantage or can fend off the threat of competitors in the environment.

Rarity is a relatively rare capability and resource for companies, with rarity so valuable resources can often contribute to competitive advantage.

Immitability or criteria is not easily imitated in favor of achieving competitive advantage for companies, that have valuable and high rarity capabilities. Immitability is achieved when the competitor does not get valuable and rarity resources or capabilities appropriately or cost too much to immitate (not worth to immitate).

Non-substitutability can be achieved if competitors does not get equal benefits from products that has been created to compete by using alternative resources and capabilities.

Exploitability can be obtained if the company can process resources and capabilities to gain more profit and value than competitors.

4. Value Chain Analysis.

Value chain analysis was developed by Michael Porter. Value chain analysis is to assess the company's activity in value creation, the amount of value obtained by total revenue, when total revenue exceeds the total cost, it is said that company get profit from value chain activities. Value chain analysis consists of two parts, which is main activity and supporting activities.

Value Chain Analysis.

Value chain by Wheelen & Hunger in the book Strategic Management and Business Policy p. 194.

The main activities consist of:.

1. Inbound logistic (raw material handling and warehousing raw material).

2. Operation (machining, assembling and testing).

3. Outbound logistics (warehousing and distribution of finished goods).

4. Marketing and sales (advertising, promotion, pricing and channel relations).

5. Service (installation, repair and parts).

Support activities consist of:.

1. Company's infrastructure (general management, accounting, finance and strategic planning),.

2. Human Resource Management (recruiting, training and development).

3. Development of Technology (research & development, product and process improvement).

4. Procurement (Purchasing of raw materials, machines, supplies).