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Why Is An Internal Analysis Important For Your Business?

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You may be wondering what internal analysis is and why it’s a vital task for a business, so in this blog article, we provide a summary on what it’s all about.

Identifying strengths and weaknesses, and regular reality checks on your organization’s resources, competitive advantage and competency are all part of internal analysis. For example, it enables you to understand the company’s current standing in the market while also providing insights into your business’s unique qualities and challenges.

Business managers need to adequately break down problems into fragments, also determine funds, and resources required plus create appropriate strategies and an internal analysis makes light work of these tasks.

Change is the only constant in today’s world. Modern businesses are thriving in the market. To get success, companies are continuously reforming their strategies and adapt accordingly to stay relevant to the customer.

With the advent of high-end technology, communication channels and influencing social media, the demand and expectation of a customer have risen significantly.

Moreover, evolving lifestyles motivate brands to modify their strategies and attune to new trends. Therefore an effective change in the business allows a company to compete with others and secure a winning position when it comes to closing more deals.

There are a variety of methodologies to perform an effective internal analysis for your organization.


Following a proven system of steps and tasks the findings are realised here are a couple of methodologies that cover all areas for a thorough internal analysis.

SWOT Analysis

SWOT (strengths, weaknesses, opportunities and threats) analysis is one of the widely used business strategies used around the world. The analysis lets businesses determine their current situation and implement a new strategy wherever necessary. SWOT analysis is an internationally accepted analysis criterion. This powerful technique helps businesses predict the future while realizing ongoing challenges. SWOT analysis is at the centre of any business.

You can use SWOT PowerPoint templates to perform problem-solving, brainstorming, decision making, planning, product evaluation, workshop session and more. Organizations can create a strong base for future goals through strategic planning. This can only be done when you always evaluate the environment in which the organization operates as a whole. Let’s move ahead and break down SWOT attributes for a comprehensive understanding.


As the word suggests, strengths refer to positive attributes that rest within the company. These attributes need to be controlled and leveraged because these can help you stand out from others. Strengths are also the elements which allow a company to do better. It can be a person, technology, market share etc. Strengths enable analysts to focus on the advantages which your business already possesses over the domain. As mentioned earlier, strength can also be strong communication, electronic media, competitive edge in the technology stack, location, brand integrity and more.


These are the attributes which can be harmful for the organization and stand in the way to success. These internal factors can be and should be addressed at earliest to prevent strategic failure. Organizations can determine the specific areas where the improvement is required and can modify strategies to address the same. For instance, weakness of any organization can be poor communication, jeopardizing quality standards, old fashioned business processes or a bruised reputation. Weakness is the one which absorbs time, effort and money of your company without generating an adequate return on investment.

Opportunities and Threats

SWOT can help you identify opportunities which can grow your organization. It is only then the opportunities can be leveraged, and the path to success can be defined. Internal analysis can help you determine which options are available for building comprehensive success in the company. Threats don’t affect the company at the time of analysis, these can impact the organization in the coming times. Changing habits of customers, taxation policy changes, pricing competition with rivals, the arrival of an alternative product, rising competitor popularity can be classified as threats.

VRIO Analysis

Through VRIO analysis, companies can attain valuable insights concerning internal business workflows. You can identify the resources that make up your assets. It is crucial to identify each asset from an objective and subjective point of view. VRIO stands for Value, Rareness, Imitability and Organization. VRIO analysis helps the organization with its resourcing, competitive implication and development potential.


If the deployed resource adds value to the customer, if you can neutralize or gain a competitive advantage with the support, then it’s good to carry on. Else, you’re at a competitive disadvantage, and you should reassess your actions & strategies.


If you own something hard to attain, be it a unique product, a team of state of the art developers, technical advantage or capabilities, then you’re good to go. If not, it means your business has value, but it lacks rarity. It merely means your resources are valuable but highly prevalent and hence are easily replaceable.


Imitation is about duplicating. Under this attribute, you identify whether it is expensive to mutate your organization’s deployed resources or not. If the answer is no, then certainly your resource is valuable and rare, but it’s easy to copy. This kind of support only adds a temporary competitive advantage. This indirectly means your resource requires considerable effort to stay on the top.


Under organization, you inspect if your company has organized management systems, structures, processes in place to leverage allocated resources? If not, then your business is at an unused competitive advantage. If your company has dedicated management systems deployed, then you’ve reached the end of the VRIO framework.


An internal analysis can help you identify business needs and determine relevant solutions to problems. It benefits everyone in the business, helps you anticipate crisis and achieve a higher return on investment. The only way of getting a real understanding of deployed resources in your organization is through internal analysis using proven methodologies like SWOT, and VRIO.

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