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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment

Rohan Motors' strategy team lists the following: (i) a dealer network inherited from a partner, (ii) a shortage of skilled welders that has held up output, (iii) a patented fuel-saving design, (iv) an exit of key designers to a rival. When classifying capabilities in an internal analysis of Rohan, which statement is correct?

The patented fuel-saving design is a strength, while the welder shortage and the designers leaving are weaknesses. Internal analysis labels factors by their effect on the firm's own capability: patents add advantage, whereas skill gaps and talent loss reduce the firm's ability to compete.

  1. A(iii) is a strength; (ii) and (iv) are weaknessesCorrect
  2. B(i) and (iii) are weaknesses; (ii) is a strength
  3. C(ii) is a strength because it limits output and costs
  4. D(iv) is a strength because it shows designers are in demand

Explanation

The patent adds distinctive advantage and is a strength. The welder shortage hurts output and the loss of designers erodes capability, so both are weaknesses. Option 2 wrongly calls the dealer network and patent weaknesses. Option 3 and 4 invert the effect on the firm.

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