Internal Appraisal – the Internal Environment

Process of Internal Appraisal in Strategic Management

What are the tools and techniques for conducting an internal appraisal?

Internal environment appraisal is the process whereby a business organization monitors its internal business environment so as to identify its strengths and weaknesses which would have an effect on its ability to achieve its business goals.

Internal Appraisal Concepts and Techniques

Basically, when a business conducts a thorough internal appraisal, it would afford the business a good knowledge of areas where it has an advantage, and areas where it has weaknesses, and seek for ways to better deal with them so as to be successful in its operations.

By now, I believe you must have started getting a sense of the importance of carrying out an internal appraisal by a business organization. But just to make things less blurry, let us take a detailed look at some of the reasons why it is important to carry out an internal audit appraisal in a business organization:

Competency, Strength and Weaknesses

One major reason why an internal appraisal is important is that it helps you to be able to determine the level of competency and strength of your organization. A typical characteristic of a strong business organization is that it makes use of up-to-date technology and systems in executing its works.

You will also find out that the business organization is able to meet its financial goals, as well as being able to accomplish its strategic planning objectives. A strong business organization poses a solid brand identity which is centred upon capabilities, resourcefulness, expertise, etc.

A weak business organization on the other hand is typical for its use of outdated technology, and its lack of expertise knowledge. In fact, it is the stark contrast of a typical strong business organization.

The role of a good internal appraisal is to be able to highlight any weaknesses in the business organization and bring forth any areas which need urgent attention.

Opportunity and Cost Position

A good internal appraisal also plays the role of helping you in determining the cost potential of your company in the market as well as helping you know your business’ potential in attracting and engaging opportunities in the market.

Basically, cost position has to deal with your business organization’s ability in terms of acquiring and managing its resources and providing great value of competitive advantage to its customers.

Potential Threats

Internal appraisal is also helpful in availing you with valuable information which will go a long way towards making sure you are being prepared for upcoming threats. The truth is, new businesses are always streaming into the industry each day, and you do not want to risk losing out to the competition; hence, the need for a regular internal appraisal.

Competitive Ability

Always carrying out an internal appraisal will in turn always help you know how competitive your business is in the industry. A good competitive ability will help you to be able to withstand your competitors in the industry.

Having known some of the importance of conducting a good internal appraisal, let us take a look at some of the features of a good internal appraisal.

Resources are Important, but not all of them

It is worthy of note to mention that resources are very important, but not all of them are. Carrying a careful and thorough internal appraisal would help you to see a number of interesting areas where you could see a competitive advantage. An internal appraisal would help you to make a side by side careful examination of the usefulness of your resources, and your business’ main goals, vision, mission and operational strategies.

As an entrepreneur, your business resources could be physical and intangible assets, financial resources, etc. You must know that not all of your resources are important towards achieving your business goals. Some could actually be a stumbling block towards achieving your business goals.

In essence, an internal appraisal could help you to identify resources which are a weakness to your business rather than a strength, which you must do well to cut out while focusing on investing in important resource.

Resources and Company must have a Beneficial Relationship

The relationship between a company and its resources plays a key role in the path of actualizing success in the company. To start with, a company must have to identify and understand its own resources, their value to the company, and if they actually have a mutual beneficial relationship with the company’s visions, and goals or not.

If the resources are found to have some sort of value to the company and has an agreement with the company’s vision and goals, then it is important for the company to build a strong relationship which will produce the most advantageous results to the company.

Supply Strength

An internal appraisal conducted by a company will help the company to be able to identify its weaknesses in supply. A company’s strength is directly linked to its resources and company objectives and vision. As an entrepreneur, your business needs resources which could be exploited.  The resources need to be able to provide a long lasting competitive advantage. You must make sure to prove your company’s strength in its resources.

Internal Appraisal and Limitations

A good internal appraisal will seek to highlight a company’s limitation so as to reduce or eradicate them. This is because your company cannot really make any success if it allows too many loop holes, and cannot handle its limitations. You must be able to quickly identify any loop hole in your business organization, and look for ways to plug them. Otherwise, they would only be sipping your company’s time and funds. A good internal appraisal would bring any limitation to light and enable you to tackle them in order for your company to be successful.

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