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

Tanishq Textiles, a Surat-based fabric maker, has a proprietary dyeing process that rivals cannot copy, a skilled workforce built over two decades, and a well-known brand among wholesalers. In the language of internal analysis, which term best describes the firm's bundle of such assets and capabilities that it can deploy to create competitive advantage?

The bundle is called resources and capabilities. Resources are assets such as the process and brand, while capabilities are the skills to use them. Together they form the internal strengths a firm uses to build advantage, unlike opportunities, industry forces or macro factors, which are external.

  1. AResources and capabilitiesCorrect
  2. BEnvironmental opportunities
  3. CIndustry forces
  4. DMacro-environmental factors

Explanation

Internal analysis looks at what the firm owns and does well: tangible and intangible resources (process, brand) and capabilities (skilled workforce, organisational skills). Opportunities, industry forces and macro factors belong to the external environment, so they do not describe internal assets.

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