' Academy al Managemsnl Executive, 1998, Vol. 12, No. 3

Competitive advantage and internal organizational assessment
W. Jack Duncan, Peter M. Gintei, and Linda E. Swayne Executive Overview

It is generally agreed in the strategic management literature that internal organizational assessment is less developed theoretically and practically than other areas of situation analysis. This paper presents a four stage approach to analyzing a firm's internal strengths and weaknesses and illustrates how the technique can facilitate strategy formulation through the integration of value chain concepts and the incorporation of the most recent findings on internal resources and capabilities. A case example is used to illustrate how the approach can be applied by strategic decision makers as a tool for exploring the potential of their companies for sustained competitive advantage.

Jay Barney observed that "the development of tools for analyzing environmental opportunities and threats has proceeded much more rapidly than the development of tools for analyzing a firm's internal strengths and weaknesses."' Indeed, discussions of strategic management comfortably refer to strategic issue diagnosis, scenarios, Porter's industry attractiveness analysis, and a multitude of other techniques designed to examine potentially important strategic factors outside the organization.^ Discussions of internal organizational assessment, by contrast, are more often functional assessments of financial, human resource, information systems, and marketing strengths and weaknesses, rather than attempts to identify the present and potential competitive advantages of the firm. Effective strategic management requires an understanding of organizational resources and competencies as well as how each contributes to the formation of organizational strengths and ultimately to the development of a competitive advantage. Focusing on the uncontrollable external environment highlights the importance of