Monitoring The External Environment Of A Company 's Internal Environment

1792 Words Feb 15th, 2016 8 Pages
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Monitoring the external environment is only one part of environmental scanning. Strategic decision makers in a firm also need to scan a corporation’s internal environment to identify its resources, capabilities, and competencies. Internal scanning, also referred to as organizational analysis, is important as it is concerned with identifying and developing an organization’s resources and competencies. It equips management to apply the resource view of the firm to determine their core and distinctive competencies. Understanding of core competency and distinctive competency is very important for proper internal scanning, which in turn can be used in strategic decision making. A core competency is a collection of competencies that crosses divisional boundaries, is widespread within the corporation. When core competencies are superior to those of the competition, they are called distinctive competencies. Firms must look within the corporation itself to identify internal strategic factors i.e. critical strengths and weaknesses that are likely to determine whether a firm will be able to take advantage of opportunities while avoiding threats. When doing an organizational analysis, the firm is concerned with identifying and developing an organization’s resources and competencies. It is particularly important that a company must continually reinvest in a core competency or there is a risk that it becomes a core rigidity or deficiency. Also, every firm must…
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