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  • Writer's picturePatricia Peprah

Internal Assessment; An Essential for Organizational Success.

Akawu Beach Resort is an independent hotel that has operated for 15 years. Over the period, the facility experienced substantial growth, exceeding its target year-on-year. Located in a popular tourist destination, coupled with excellent service and personalized experiences, the 85-bedroom facility received various awards and recognitions. However, in recent years, the hotel has faced some challenges with its performance, resulting in a decline in revenue and profit margins.

The management attributed the decline to increased competition and changes in guest expectations and preferences and called on the owners to invest in a new building with modern facilities. They tried to increase sales through discount vouchers and sales promotions and offer lots of freebies to guests with the hope of getting repeat business. They have also introduced transport services into the mix to generate additional revenue.

The steps taken by management may appear suitable; however, they have attempted to address the issue by concentrating on external factors rather than taking a closer look at their internal environment, which may be the source of the problems.

The above is the experience of most companies, taking decisions based on external factors instead of looking at the business environment as a whole. Companies should assess their internal environment and utilize the information effectively to improve performance and strategic directions.

What is an Internal Assessment all about?

Internal assessment of an organization focuses more on the resources available, capabilities, and core competencies that create a competitive advantage. Components of an internal analysis include, among others, identifying the strength and weaknesses within the organization, which is similar to the internal factors of a SWOT analysis. It gives an understanding of the strength and weaknesses of a business's functional areas in a way that helps it take advantage of the opportunities available.

Organizational Resources, Capabilities and Core Competencies

An organization's resources are critical to the business and can be tangible or intangible. All tangible resources can be seen and quantified; examples are the organization's physical and technological resources, while intangible resources are the assets with value and no physical substance that gives the company a competitive advantage. Competitors cannot easily imitate intangible resources. Examples include the organization's reputation, ability to innovate and human resources.

When an organization can use the available resources to their maximum potential, it develops capabilities, that is, the actions or processes resulting in core competencies. Capability is a process that develops in the organization's functional areas—for example, a company may have the latest technology, but its ability to effectively use the technology to offer seamless service is the company's capability.

Capabilities should translate to core competencies which are the expected results. Core competencies can be considered as capabilities but not all capabilities are core competencies. For a sustainable advantage in the marketplace, an organization's core competencies should be challenging for its rivals to imitate.

Value Chain Analysis

Understanding value creation is essential; it is the reason for an organization's existence and what the customer is willing to pay for. The value chain analysis allows organizations to understand which functions or operations create value for which the customers are willing to pay. A value chain analysis should include the role of the support function and the activities within the value chain that helps produce and sell the products and services of the organization. Unfortunately, some organizations ignore the support function, especially the human resources contribution to the value chain.

By conducting this analysis, the company can eliminate activities which do not add value to the final product or service, thereby reducing cost and improving efficiency. It can also help the company identify and leverage high-value activities for competitive advantage.

The failure of an organization to conduct an internal assessment may significantly impact its performance. Aspects such as resource allocations, skills development, an adaption of customer preferences, emerging technologies, branding and reputation management greatly influence performance if identified and addressed. These factors can optimize a company's operations, improving performance and profits.

Every organization should conduct internal analysis and strive to leverage its resources, capabilities and core competencies to drive innovation and growth. This is essential in building a robust and resilient business that can thrive in the industry.


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