Chapter 4 Worksheet
The purpose of the internal analysis is to assess the competitive capabilities and resources of the company
under analysis. For each strategic factor throughout the worksheet, you should conclusively state if the
factor is a strength or a weakness. This will strengthen your analysis and help you with your subsequent
SWOT analysis.
1. How well is the current strategy working (page 87)?
In this section you must address the criteria and the 'how well' question simultaneously. For example, if
the company is using a broad differentiation strategy as their present strategy, how well is this strategy
working for the company? For a broad differentiation strategy, I would expect you to cite examples of
adding value for the customer and other stakeholders. Then I expect you to determine how well they are
implementing the strategy.
Criteria
What are the present
strategies? (Note: This
question applies to the
corporate, business and
functional levels of the
organization.
Assess the company’s relative
performance using the three
tests for a winning strategy.
(Refer to Chapter 2, pages 68
and 69.)
- Goodness of fit
- Competitive advantage
- Performance
What is the competitive scope
 stages of the industry's
production-distribution
chain it operates,
 geographic market
coverage, and
 size and composition of
the customer base?
What are the functional
strategies
 Production,
 marketing.
 Finance,
 Human resources,
 R&D,
 Etc.?
Start by listing the functional
areas; then provide the facts
associated with each of the
areas. Finally, conduct your
analysis and determine how
well the functional areas are
Facts
What does this mean?
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGrawHill.
1
working and the associated
strengths and weaknesses.
Has the company achieved its
financial objectives? Go back
to your chapter 2 worksheets
for the financial objectives.
Determine if they achieved
their short and long-term
objectives and provide the
supporting analysis why they
did or did not achieve the
objective. Then you are in a
position to determine the
associated strengths or
weaknesses.
Has the company achieved its
strategic objectives? Go back
to your chapter 2 worksheets
for the strategic objectives.
Determine if they achieved
their short and long-term
objectives and provide the
supporting analysis why they
did or did not achieve the
objective. Then you are in a
position to determine the
associated strengths or
weaknesses.
What is the company's
position relative to EACH of
its competitors?
 Market share
 Profit margin
 Net profits
 ROI
 EVA (page 9)
 MVA (page 10)
 Financial strength
 Sales growth
 Image
 Reputation
 Industry position
 Etc.
If the strategy is not working,
is it due to:
 Weak strategy and/or
 Poor implementation
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGrawHill.
2
2.
What are the company's resource strengths and weaknesses (page 89)?
The purpose of this tool is to assess the competitive values of the company's resources. The four tests of
competitive value (pages 123-124) are:
 Is the resource hard to copy?
 How long does the resource last?
 Is the resource really competitively superior?
 Can the resource be trumped by a rival's resources/capabilities?
For each of the resource types listed below, assess the competitive value of each resource.
Criteria
Facts
What does this mean?
Please note the following
criteria are examples to get
you started. You should add
the applicable resources for
each category.
Skills and expertise
 Proprietary technology
 advertising and promotion
 product innovation
 ability to improve
production processes
 technological know-how
Physical assets
 plant capacity
 plant and equipment age
and technological
capabilities
 plant and retail location
 access to distribution
channels
 wide geographic coverage
 global distribution
capability
 ownership of valuable
natural resource deposits
Human assets
 Superior intellectual
capital
 Collective organizational
knowledge
 Proven managerial
capabilities
Organizational asset
 financial position
 patents
 better product quality
 culture
 product line breadth and
depth
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGrawHill.
3





product quality
proprietary technology
mineral rights
customer needs data base
exceptionally strong
financial position
Intangible asset
 image
 brand name
 reputation for customer
service
Competitive capabilities
 cost advantages
 sophisticated use of ecommerce
 logistics
 strong supplier and dealer
networks
Market position
 recognized industry leader
 attractive customer base
 Alliances or cooperative
ventures
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGrawHill.
4
3A. Are the company's prices and costs competitive (page 98)?
This question applies to all companies independent of the strategy (cost or differentiation) they use to compete in their industry. Using the
following criteria, assess each step in the value chain (inbound logistics and supplies, operations, outbound logistics, sales and marketing, service,
R&D, human resources, general and administrative) and compare each step with the competitor's prices and costs. After completing this analysis,
examine the value chain as a whole. How does the integration of each successive step in the value chain lower costs? Finally, assess the value
chain of the company in the context of the industry (page 132).
Inbound
Logistics
Operations
Outbound
Logistics
Sales and
Marketing
Service
Profit
Margin
R&D
HRM
A&G
Structural cost drivers
 Scale economies
 Learning curve
 Technology
requirements
 Capital intensity
 Product line
complexity
 Etc.
Executional cost drivers
 Commitment to
continuous
improvement
 Product quality
 Process quality
 Capacity
utilization
 Internal business
processes
 Working with
buyers and
suppliers on costs
 Etc.
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGraw-Hill.
5
3B. If the company uses either a differentiation or best-value strategy, also assess how each step in the value chain creates or adds value (e.g.
incorporates product attributes and user features, raises performance, increases buyer satisfaction) and how the integration of each successive step
in the value chain increases value.
Criteria
Also refer to pages 164167 for additional
differentiation criteria.
 Incorporate product
attributes and user
features that lower the
buyer's overall costs of
using the company's
product
 Incorporate features
that raise the
performance a buyer
gets out of the product,
 Increase features that
enhance buyer
satisfaction in noneconomic or intangible
ways
 Deliver value to
customers via
competitive capabilities
that rivals do not have
or cannot afford to
match
Inbound
Logistics
Operations
Outbound
Logistics
Sales and
Marketing
Service
Profit
Margin
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGraw-Hill.
R&D
HRM
A&G
6
4. Is the company competitively stronger or weaker than key rivals (page 108)?
Although I provide only one column for competitors, you should add the number of columns necessary to
assess each of the competitors.
Key success
weight
Company
Competitors
factors (Refer
rating
Weighted
rating
Weighted
to Q 6 in the
score
score
external
analysis for a
list of factors
to assess.)
5. What strategic issues and problems merit front-burner managerial attention (page 111)?
The following are typical issue
areas. This is not an exclusive list
of areas. You should provide
additional strategic issues based on
your analysis of the environment
and the company's competitive
capabilities and resources.
Is the present strategy adequate in
light of driving forces present in the
industry?
Is the present strategy geared to the
industry's future key success factors?
How good a defense does the present
strategy offer to the 5 forces?
Does the present strategy protect the
company against external threats and
internal weaknesses?
Is the company vulnerable to
competitive attack by one or more
rivals?
Does the company have competitive
advantages or must it offset the
competition's competitive
advantages?
What are the strong and weak parts
of the current strategy?
facts
What does this mean?
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGrawHill.
7
What additional moves are necessary
to:
 Improve costs
 Capitalize on emerging
opportunities
 Boost the company's
competitive position
6. Financial ratio analysis for the company and industry (Refer to the web page sample spread sheet. In
addition, you are responsible for obtaining the industry's financial ratios from various sources on the
Internet or the library to use in your analysis. I encourage you to share this information with other
teams.)
7. Top Management’s values and perspectives
How are the personal ambitions, business philosophies, and ethical beliefs of managers stamped
on the company's strategy and competitive capabilities?
8. Organization’s culture
How are the company's values, policies and culture impacting the strategy, strategy
implementation and company's competitive capabilities?
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGrawHill.
8
9. SWOT Matrix (Refer to page 95)
The external and internal analyses provide you with information you need to tailor the strategy for a particular company. The external analysis
provided you with the opportunities and threats for the industry and the company. The internal analysis revealed the company's competitive
capabilities (strengths and weaknesses). To tailor the strategy, you want a fit between the company's capabilities and the environment's constraints
and opportunities.
To conduct the SWOT, look for the points of intersection between opportunities and strengths and weaknesses. S-O intersections enable a
company to exploit the opportunity. W-O intersections require the company to address the weakness in order that they may fully exploit the
opportunity. S-T intersections allow the company to defend against the threat. Strengths spent on defending against threats detract from the
company's ability to use that particular resource for exploiting opportunities. W-T intersections jeopardize the company. These intersections
require the company to bolster the weakness in order to provide defensive capabilities. Depending on the immediacy of the threat, these
intersections may require the company's immediate attention.
Threat # 5
Threat # 4
Threat # 3
Threat # 2
Threat # 1
Opportunity #5
Threats
Opportunity #4
Opportunity #3
Opportunity #3
Opportunity #1
Opportunities
Strength # 1
Strengths
Strength # 2
Strength # 3
Strength # 4
Weakness
es
Strength # 5
Weaknesses # 1
Weaknesses # 2
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGraw-Hill.
9
Weaknesses # 3
Weaknesses # 4
Weaknesses # 5
Thompson, Strickland, and Gamble, 2005, Crafting and Executing Strategy, 14th edition, McGraw-Hill.
10