INTERNAL

ENVIRONMENTAL
ANALYSIS
CHAPTER 4
ENVIRONMENTAL ANALYSIS
- about the internal and external
assessment of the organization -
what the organization has or does
not have in terms of resources and
capabilities, and what is happening
in the external environment.
SWOT ANALYSIS
- is an acronym for strengths,
weaknesses, opportunities and
threats, and provides a framework
for analyzing these elements in the
organization's external and internal
environment. SWOT is one of the
best-known techniques for doing an
environmental analysis.
WHAT IS STRENGTH?
It is a resource or a capability that the
organization has which is an advantage
relative to what competitors have.

WHAT IS WEAKNESS?
This term refers to the lack or deficiency of
a resource that represents a relative
disadvantage to an organization in
comparison to what competitors have.
WHAT IS OPPORTUNITY?
This term refers to a favorable
situation in the organization’s external
environment.

WHAT IS THREAT?
This term refers to a unfavorable
situation in the organization’s external
environment.
INTERNAL ANALYSIS FOR
EFFECTIVE STRATEGY
DEVELOPMENT
Resource-based view – organizational resources
have an impact on the management capabilities
of the organization which in turn are the sources
of the core competencies that may ultimately
lead to a competitive advantage.
3 broad categories of resources are as follows:
• Tangible assets – easiest to identify because
an organization’s location and the status of its
building and equipment are visible.
• Intangible assets – are assets that one
cannot touch, but they are often the critical
assets that create the real competitive
advantage.
• Organizational capabilities – are actually the
glue that emerges over time and binds the
organization together. We can say then that
organizational strategic capabilities are the
complex network of processes and skills
that determine how effectively and efficiently
the inputs in the organization will be
transformed into outputs.
Value chain analysis
–is thus a systematic method of determining
how the organization’s various activities
contribute to creating value for the customer.
When the value chain is examined as a
method of internal analysis, the chain of
activities is looked at to determine where
value is really added to the product or service.
Value
– can be described as the amount of money
that customers are willing to pay for what the
organization is providing them.
PORTER'S VALUE
CHAIN
 PRIMARY ACTIVITIES
• Input Logistics – associated with the receiving,
storing and distributing of inputs to the product.
• Operations – include those that are associated with
the transformation of inputs into the final product.
• Output Logistics – refers to all the issues related to
the distribution of the product or service to the
customers.
• Marketing – refers to the methods used to persuade
customers to make the purchases.
• Customer Service – basic activities such as
installation, repair, training, the supply of parts and
perhaps product adjustment.
 SUPPORT ACTIVITIES
• Procurement – refers to the function of
purchasing units.
• Technological development – is important for
all activities, and includes the different
processes and equipment used throughout
the entire value chain.
• Human Resources Management – the
importance of this activity cannot be
overemphasized, because recruitment,
selection, training and remuneration of
employees will affect all levels of the
organization.
• General Administration and Infrastructure –
it is important for the organization to
achieve its overall goals. That is why there
must be a general administration and
infrastructure in place, for example effective
and efficient planning systems.
• Financial Management – all activities must
adhere to effective financial recording and
control.
CASE STUDY - ACKERMANS
• Serves most South African urban centers through its
national chain of over 300 stores.
• Store layout is designed for customer comfort with wide
aisles and vibrant, fun merchandizing.
• Goods are easy to find and are clearly priced.
• Depth of stock ensures ongoing availability to
customers.
• Ackermans meets the promise to its customers to give
“just what you need”
• It offers an exciting range of coordinated mainstream
fashion in clothing, footwear, homeware, and accessories
that appeal to the mass middle market of value-seeking
consumers.
Ackermans also serves consumers purchasing
through buy-aid schemes. The A-PLUS club offers the
following additional benefits to its members:
• Lifestyle Family Club magazine every second month
• Regular competitions and lucky draws
• 24-hour legal assistance
• Home assist - assisting with home emergencies
• Care Plan (death benefits)
• Personal health advisor
• Team Line (advice on studies and peer pressure)
• Trauma counseling
• Funeral advice
• HIV protection/treatment service
Ackermans has developed its own highly
sophisticated information system modelled on
world-class examples. It draws on the
expertise of the top international retail service
providers, linking suppliers to store to
shoppers and ensuring the delivery of the right
merchandise to the right shops at the right
time.

Career growth is actively encouraged through

life skills and technical training create a more
motivated, skilled and productive staff
compliment.
Trading in today's environment, Ackermans
maintains:
• A very competitive price positioning
• A stringent quality focus that ensures outstanding
value
• A close understanding of customer needs through
regular research
• A strong fashion identity through its in-house
brands, as well as its international Hang Ten
young adult casual wear label
• A high level of consumer interest by sourcing
worldwide exciting ranges sold as great value
prices
• Consumer comfort through its new generation of
colorfully merchandised stores
• Strong consumer interest through its interactive live
radio station
• High visibility through tenancy in popular shopping
centres and through local and national advertising
• Strategic alliances with suppliers in an effort to
contain costs throughout the supply chain, to
maintain inventory levels tailored to the consumer
profiles of each store, as well as to ensure just-in-
time deliveries
• Support of local manufacturers
• High levels of staff productivity through self-
development and life skills courses and incentive
schemes for all staff members