Strategic Planning in the Small Business

HO 2-5 (continued)

Unit

2

The

environmental analysis has provided

a series of im­

portant insights into the

firm's external situation.

It has helped

the business owner

view the business

more clearly in its

com­

petitive environment

and has prompted

awareness of and

focus

on key environmental

threats and opportunities.

This

chapter

extends the

analysis phase of the

strategic planning

model by

examining

the firm's internal condition.

The internal

analysis

offers a

profile of the company's

internal operations

and is

geared

towards pinpointing

and assessing the

key internal

strengths

and weaknesses of

the firm.

VALUE OF INTERNAL

ANALYSIS

Objective

internal analysis

is essential for

at least two reasons.

First, many

managers of small

businesses have

totally inaccurate

conceptions

of the firm's internal

rotate of affairs.

Often, they

rely on personal

opinion or

feel to assess their firm's

internal

condition. This

biased view may

result in an unrealistic

per­

spective of the

company's capacit)y

potential, and areas

of con­

cern. Only through

a careful and

systematic internal

analysis

can a reasonable

and meaningful

profile be attained.

The significance

of developitig

an accurate business

profile

becomes more relevant

as one considers

a second reason

or

rationale for internal

analysis. Essentially,

internal analysis

in­

dicates whether the

business has available

the means for

han­

dling the previously

realized environmental

opportunities

and

threats. This realization

is =ritical.

It can change the

focus of a

company's activities

and strategies

and, in many situations,

save

the business from

disaster. Yet, for

many companies and

man­

agers, it is a forgotten

step in the logical

planning sequence.

Consider

the example of Tannert

Video in Capsule

2-1.

Here, environmental

analysis was

performed successfully

and

54

Part One The

Annlysi Phase

197