Mohammad T Islam (BSc, MBA, MEd)

In today’s dynamic business environment, the ability of organisations for adaptation is critical for sustaining long-term success and competitiveness. Strategic adaptation refers to the continuous process of adjusting organisational strategies, structures, and processes in response to internal and external changes (Rumelt et al., 2019). Unlike static approaches to strategy, adaptation recognises the uncertainty and turbulence inherent in global markets, technological advancements, and shifting consumer preferences. This article explores the significance of adaptation in strategic management, the theoretical foundations underpinning adaptive strategies, the role of dynamic capabilities, and practical examples of how organisations achieve sustained competitiveness through adaptation. The Importance of Strategic Adaptation Strategic adaptation ensures that organisations remain relevant amidst environmental changes. Factors such as globalisation, technological disruption, evolving regulatory frameworks, and changes in consumer behaviour necessitate continuous realignment of strategies (Teece, 2007). Organisations that fail to adapt risk losing their competitive position, as illustrated by the decline of Blockbuster, which was unable to respond effectively to digital streaming innovations, while Netflix transformed from a DVD rental service into a dominant online streaming platform (McDonald & Eisenhardt, 2020). Adaptation also enhances resilience by allowing firms to not only respond to crises but also anticipate opportunities. For example, during the COVID-19 pandemic, organisations such as Zoom rapidly scaled their technological infrastructure to meet the surge in demand, demonstrating the importance of adaptive capacity in uncertain times (Seetharaman, 2020). Theoretical Foundations of Adaptation The academic basis of strategic adaptation is grounded in theories such as Contingency Theory, the Dynamic Capabilities Framework, and Organisational Learning Theory. Contingency Theory suggests that there is no single best way to organise or strategise; instead, the effectiveness of a strategy depends on the fit between the organisation and its environment (Donaldson, 2001). The Dynamic Capabilities Framework (Teece, Pisano & Shuen, 1997) emphasises the ability of organisations to sense, seize, and transform resources to match environmental demands. This perspective argues that long-term success is not about possessing resources but about renewing and reconfiguring them. Organisational Learning Theory highlights the importance of continuous learning and knowledge integration for adaptation. Organisations that encourage learning are more likely to identify changes early and innovate accordingly (Argyris & Schön, 1996). Dynamic Capabilities and Adaptation A central concept in strategic adaptation is the notion of dynamic capabilities. These capabilities go beyond operational effectiveness and focus on the ability of firms to reconfigure competencies in response to changing environments (Teece, 2007). Examples include: Apple’s innovation ecosystem, where capabilities in design, supply chain management, and marketing are continually reconfigured to launch new products. Toyota’s lean manufacturing system, which evolved into a model of adaptive efficiency, allowing the company to maintain competitiveness across decades (Liker, 2004). Research shows that firms with strong dynamic capabilities are better equipped to navigate digital transformation, global competition, and regulatory change (Benini, Nikou & Calabretta, 2025). Organisational Culture and Strategic Adaptation Adaptation is not merely structural or operational; it also involves a transformation in organisational culture. Adaptive organisations foster a culture of innovation, agility, and continuous learning. For instance, Google’s 20% time policy encouraged employees to pursue innovative projects outside their regular roles, leading to the development of services such as Gmail. Similarly, Spotify’s agile squad model demonstrates how cultural flexibility enables rapid innovation in response to user demands (Denning, 2018). Conversely, organisations resistant to cultural adaptation often face decline. Kodak, despite pioneering digital photography, clung to its traditional film-based business model due to cultural rigidity, leading to bankruptcy (Lucas & Goh, 2009). Adaptation and Digital Transformation The rise of digital technologies has amplified the necessity for adaptation. Firms across industries are leveraging artificial intelligence (AI), big data analytics, and automation to transform their operations. Small and medium-sized enterprises (SMEs), for example, are increasingly adopting AI-driven tools to optimise e-commerce performance. Research by Karimi and Ranani (2025) indicates that SMEs with stronger adaptive capabilities are more likely to achieve successful digital integration. Similarly, airline companies are adapting by implementing digital transformation strategies such as AI-based scheduling and customer engagement tools to maintain competitiveness (Yıldız & Mazıoğlu, 2025). Strategic Adaptation in Crisis Situations Crises such as the COVID-19 pandemic, geopolitical conflicts, and climate change highlight the role of adaptation in survival. Organisations with adaptive leadership were able to restructure operations, introduce remote working models, and innovate supply chains during the pandemic (Ramadhan & Nabila, 2025). For instance, Unilever adapted by reconfiguring its production lines to manufacture hand sanitisers, while luxury brands such as LVMH repurposed perfume factories for medical supply production. These adaptive strategies not only safeguarded operations but also enhanced corporate reputation. Challenges to Strategic Adaptation Despite its importance, strategic adaptation faces challenges: Organisational inertia – large firms with bureaucratic structures often resist change, making adaptation slower (Hannan & Freeman, 1984). Resource constraints – smaller firms may lack the financial or human resources to invest in adaptive strategies. Short-term pressures – shareholder demands for immediate returns can limit long-term adaptive investments (Porter & Kramer, 2011). Cultural resistance – employees accustomed to traditional practices may oppose change, undermining adaptation efforts. Practical Examples of Strategic Adaptation Netflix: Transition from DVD rentals to streaming and later to content production illustrates proactive adaptation to technological and consumer changes. Tesla: Demonstrates adaptive strategies by continuously integrating innovations in electric vehicles, renewable energy, and autonomous driving. Starbucks: Adapted by enhancing its digital ordering platforms and loyalty apps, ensuring customer engagement even during the pandemic (Forbes, 2020). Adaptation in strategic management is no longer optional but a necessity for survival and growth. By leveraging dynamic capabilities, fostering a learning-oriented culture, and embracing digital transformation, organisations can effectively adapt to environmental uncertainties. Firms that fail to adapt, however, risk obsolescence in an increasingly turbulent global landscape. Ultimately, strategic adaptation represents a mindset of proactive responsiveness, enabling organisations to balance stability with flexibility and sustain long-term competitiveness. References Argyris, C. & Schön, D. (1996) Organisational Learning II: Theory, Method, and Practice. Reading, MA: Addison-Wesley. Barney, J. & Hesterly, W. (2019) Strategic Management and Competitive Advantage. 6th edn. Harlow: Pearson. Benini, G., Nikou, S. & Calabretta, G. (2025) ‘Expanding organisational dynamic … Read more

Strategic control and evaluation are vital components of the strategic management process. Once a strategy has been formulated and implemented, organisations must ensure that it remains aligned with their objectives, competitive environment, and resource base (Hitt et al., 2021). Without effective control and evaluation mechanisms, even the most carefully formulated strategies may fail due to poor execution or lack of adaptation to changing circumstances. This article explores the significance of strategic control and evaluation, the role of Key Performance Indicators (KPIs), the application of the Balanced Scorecard (BSC), and the challenges of maintaining alignment between strategy and organisational performance. The Role of Strategic Control Strategic control refers to the process of monitoring the execution of strategies, assessing their outcomes, and making necessary adjustments (Wheelen & Hunger, 2020). Unlike operational control, which focuses on day-to-day efficiency, strategic control evaluates whether the overall strategy is effective in achieving long-term goals. According to Rothaermel (2020), the central purpose of strategic control is to ensure that strategy execution remains consistent with the organisation’s mission, vision, and competitive positioning. For example, in the airline industry, companies such as Ryanair constantly monitor fuel costs, regulatory changes, and customer satisfaction. If their cost leadership strategy is threatened by rising operational expenses, they may implement new efficiency measures or renegotiate supplier contracts to maintain their competitive edge. This illustrates how strategic control ensures that strategy adapts to environmental shifts. Key Performance Indicators (KPIs) One of the most commonly used tools in strategic evaluation is the establishment of Key Performance Indicators (KPIs). KPIs are quantifiable metrics that allow managers to measure progress toward objectives (Czerwińska & Pacana, 2024). Effective KPIs must be aligned with organisational strategy, measurable, and actionable. For instance, in a retail organisation, KPIs might include: Sales growth percentage (financial performance), Customer retention rate (customer satisfaction), Inventory turnover ratio (operational efficiency), and Employee engagement scores (organisational culture). KPIs not only provide insights into whether strategic goals are being achieved but also signal when corrective actions are necessary. However, as Chobitok and Verkush (2025) argue, KPIs must be carefully designed to avoid an overemphasis on short-term metrics that neglect long-term strategic objectives. The Balanced Scorecard Developed by Kaplan and Norton (1996), the Balanced Scorecard (BSC) remains one of the most influential frameworks for strategic evaluation. Unlike traditional financial metrics, the BSC expands the focus to include four perspectives: Financial perspective – assessing profitability, revenue growth, and cost management. Customer perspective – measuring satisfaction, retention, and brand loyalty. Internal processes perspective – evaluating innovation, production efficiency, and quality control. Learning and growth perspective – examining employee skills, organisational culture, and knowledge management. By incorporating these dimensions, the BSC ensures that organisations do not focus solely on financial outcomes but also on the drivers of long-term success (Vieira, 2025). For example, Apple uses a BSC approach by tracking not only sales of its devices but also customer satisfaction, employee innovation, and supply chain efficiency, ensuring its strategies remain sustainable. Strategic Evaluation Process Strategic evaluation generally follows a structured process (Johnson et al., 2017): Defining performance standards – identifying measurable targets based on strategic objectives. Measuring actual performance – collecting data through KPIs, surveys, and market analysis. Comparing results with objectives – evaluating deviations from expected performance. Taking corrective action – adjusting resources, revising strategy, or re-aligning objectives. An example can be seen in Tesla, which sets ambitious goals around innovation and market penetration. By comparing its actual sales and production volumes against strategic objectives, Tesla evaluates whether it is on track to achieve its vision of accelerating sustainable energy adoption. Deviations, such as supply chain disruptions, are addressed through corrective actions like investing in in-house battery production. Challenges in Strategic Control While strategic control is essential, organisations face several challenges: Information overload: Managers may be overwhelmed by excessive data, making it difficult to focus on critical indicators (Melikidze, 2025). Resistance to change: Employees may resist corrective actions if they perceive them as threats to existing routines. Short-termism: Overemphasis on quarterly financial KPIs may undermine long-term strategic objectives (Wakeanda & Obere, 2025). External uncertainty: Rapid environmental changes, such as economic downturns or technological disruptions, can render existing strategies obsolete. For example, during the COVID-19 pandemic, many firms discovered that their existing KPIs and evaluation frameworks were no longer adequate. Hospitality businesses had to adopt new measures focused on digital engagement and health safety rather than traditional occupancy rates. The Importance of Feedback and Learning Strategic control should not only be about monitoring but also about organisational learning. According to Argyris (1999), effective organisations engage in double-loop learning, where they do not only correct deviations from plans but also question whether the underlying assumptions of the strategy are still valid. For instance, Netflix initially focused on DVD rentals. Through continuous evaluation and learning, it recognised the shift towards streaming services, adjusting its business model accordingly. Today, its KPIs focus on subscriber growth, viewing hours, and content quality – all aligned with its evolving strategy. Integrating Technology in Strategic Evaluation The use of Business Intelligence (BI) systems and data analytics has transformed strategic control. Modern systems allow for real-time monitoring of KPIs, predictive analytics, and data visualisation dashboards (Chobitok & Verkush, 2025). For example, Amazon employs advanced analytics to evaluate customer behaviour, supply chain efficiency, and new product launches. By integrating AI-driven insights, it can adapt its strategy faster than competitors. Similarly, banks use the BSC integrated with digital dashboards to evaluate risk management, compliance, and customer satisfaction (Melikidze, 2025). Strategic control and evaluation are indispensable for ensuring that organisations remain aligned with their long-term objectives. Tools such as KPIs and the Balanced Scorecard provide structured frameworks to measure progress, identify deviations, and adapt to environmental changes. However, organisations must avoid pitfalls such as information overload, short-termism, and resistance to change. The future of strategic evaluation lies in leveraging technology, embracing organisational learning, and integrating financial and non-financial performance measures. By doing so, organisations can ensure that their strategies remain relevant, flexible, and effective in achieving sustainable success. References Argyris, C. (1999) … Read more

Strategy implementation is the critical phase following formulation, where organisational plans are translated into action. While strategy formulation defines what an organisation wants to achieve, implementation determines whether those objectives will be realised. According to Rothaermel (2020), successful strategy implementation involves aligning resources, structures, and cultures with chosen objectives. However, implementation often proves more difficult than formulation, as it requires coordinated efforts across multiple layers of the organisation. The Importance of Strategy Implementation The gap between strategy formulation and execution has long been a challenge for organisations. Studies indicate that many firms fail not because they choose the wrong strategy, but because they are unable to implement it effectively (Hrebiniak, 2013). Implementation requires leadership commitment, clear communication, and resource allocation (Carreño, 2024). For example, Apple’s success with the iPhone launch was not solely due to its innovative design but also to its seamless execution across design, supply chain, and marketing teams. This highlights that execution excellence is as important as strategic intent. Aligning Organisational Structure with Strategy Organisational structure plays a crucial role in enabling or constraining strategy implementation. A rigid, hierarchical structure may hinder innovation and adaptability, while a decentralised, flexible structure supports responsiveness (Anthony & Dumbiri, 2025). For instance, when Google diversified into areas such as cloud services and artificial intelligence, it restructured under Alphabet Inc. to allow greater autonomy for different business units. This ensured alignment between strategy and organisational design. The choice of structure should be contingent upon the strategy. For example: A cost leadership strategy may require centralised control to achieve efficiency. A differentiation strategy may demand decentralisation to foster innovation and creativity. Leadership and Strategic Alignment Leadership is a vital determinant of implementation success. Leaders must not only communicate strategic objectives but also model behaviours consistent with them (Kotter, 2012). Strategic alignment refers to ensuring that all organisational activities, from resource allocation to employee performance, are directed towards strategic priorities (Carreño, 2024). An illustrative example is Tesla, where Elon Musk’s leadership has been pivotal in aligning employees and stakeholders with the mission of accelerating sustainable energy. Despite challenges, Tesla’s strategic goals are embedded in corporate culture, influencing decisions from product development to supply chain investments. The Role of Organisational Culture Organisational culture significantly influences strategy implementation. A culture that fosters collaboration, innovation, and accountability supports change, while resistance or misalignment can derail efforts (Permana & Schouten, 2025). For example, companies implementing digital transformation initiatives often fail if cultural barriers—such as employee resistance to new technologies—are not addressed (Sahl, 2025). A positive case is Southwest Airlines, whose culture of customer service and employee empowerment reinforces its low-cost strategy. Conversely, Nokia’s decline in the smartphone market is often attributed to cultural rigidity and poor adaptation to strategic shifts. Resource Allocation and Implementation Implementation requires adequate financial, human, and technological resources. Without proper allocation, strategies remain aspirational. As noted by Dumbiri and Anthony (2025), allocating resources in line with market trends ensures competitiveness. For example, Amazon has consistently reinvested profits into technology, logistics infrastructure, and cloud computing, enabling it to execute both cost leadership in retail and differentiation in cloud services. However, misallocation can undermine strategy. Many firms pursuing innovation fail because they underfund research and development, or spread resources too thin across competing priorities (Muzaffarovna & Bakhtiyarovna, 2025). Communication and Employee Engagement Effective communication ensures employees understand their roles in achieving strategic goals. Research suggests that employees who feel informed and engaged are more likely to contribute to successful implementation (Iqbal et al., 2025). For example, Unilever’s Sustainable Living Plan was effectively implemented by embedding sustainability goals into performance metrics and communicating progress transparently across the organisation. Employee engagement also reduces resistance to change. According to Kotter (2012), change initiatives are more successful when employees feel ownership over strategy. Techniques such as workshops, town halls, and feedback mechanisms are essential for creating alignment. Challenges in Strategy Implementation Despite its importance, strategy implementation faces common challenges: Resistance to change – Employees may resist new processes or technologies. Inadequate leadership support – Lack of visible commitment undermines credibility. Insufficient resources – Strategies fail if they are not supported financially. Cultural misalignment – Organisational values may conflict with strategic goals. Poor monitoring and evaluation – Without feedback loops, firms may fail to adjust. For example, General Motors’ failed Saturn brand was partly due to resource misallocation and cultural misfit between Saturn’s innovative ethos and GM’s traditional bureaucracy. Measuring Implementation Success Monitoring and evaluation are crucial for tracking implementation. Key Performance Indicators (KPIs), Balanced Scorecards, and performance dashboards are widely used tools (Kaplan & Norton, 2008). For example, Siemens employs a global scorecard to align financial and non-financial metrics with strategic objectives, ensuring accountability at every level. Continuous evaluation allows organisations to adapt to external changes. Firms operating in volatile markets, such as technology or healthcare, must embrace dynamic capabilities—the ability to reconfigure resources rapidly to remain competitive (Teece, 2014). Real-World Examples of Strategy Implementation Apple Inc. – Achieved success by aligning design, supply chain, and marketing in implementing its innovation strategy. Toyota – Implemented its lean production strategy globally by embedding efficiency and continuous improvement into culture and processes. Netflix – Transitioned from DVD rentals to streaming by restructuring operations, reallocating resources, and fostering a culture of agility. IBM – Successfully shifted towards consulting and cloud services by retraining employees and restructuring business units. Strategy implementation is a multidimensional process that requires leadership commitment, resource alignment, effective communication, and a supportive culture. While strategy formulation sets the direction, implementation determines whether success is achieved. Firms such as Apple, Amazon, and Toyota illustrate how well-executed implementation can generate sustainable competitive advantage. Conversely, failures like Nokia and GM’s Saturn brand demonstrate that poor execution can undermine even sound strategies. Ultimately, organisations must recognise that implementation is not a one-off task but an ongoing process, requiring monitoring, adaptability, and integration into the organisational fabric. By fostering alignment between strategy, structure, culture, and resources, firms can ensure that strategic plans translate into meaningful outcomes. References Anthony, O.O. & Dumbiri, A.F., 2025. Promoting … Read more

Strategy formulation is a central process in strategic management, where organisations decide how to allocate their resources and capabilities to achieve long-term objectives. It involves identifying competitive positions, selecting strategic options, and aligning them with the organisation’s mission, vision, and goals. According to Grant (2019), strategy formulation provides the blueprint for competing effectively in dynamic markets, ensuring firms remain relevant and sustainable. This essay explores the concepts, levels, and methods of strategy formulation, using academic theories, real-world examples, and critical evaluation. It focuses on Porter’s generic strategies, corporate and business-level strategies, and the role of core competencies in creating sustainable competitive advantage. Foundations of Strategy Formulation The first step in strategy formulation is understanding the internal and external environments. The SWOT analysis (strengths, weaknesses, opportunities, and threats) is often used to align internal capabilities with external conditions (Wheelen & Hunger, 2020). For example, Tesla identifies its strengths in innovation and brand recognition, but must also respond to external threats such as increasing competition in the electric vehicle market (Zang et al., 2025). Strategy formulation also requires clarity of mission and vision. As Hitt et al. (2021) argue, an effective mission statement helps define an organisation’s competitive scope and guides strategic choice. For instance, Google’s mission—“to organise the world’s information”—provides a broad scope for strategies that include diversification into artificial intelligence and cloud computing. Porter’s Generic Strategies Michael Porter’s (1985) framework identifies three generic strategies: cost leadership, differentiation, and focus. Each provides a distinct pathway to competitive advantage. Cost Leadership This strategy seeks to become the lowest-cost producer in an industry. Firms following cost leadership achieve economies of scale, efficient production, and tight cost control. Aldi, for example, implements cost leadership by minimising operating costs, offering limited product lines, and leveraging supply chain efficiency (Barney & Hesterly, 2019). Differentiation Differentiation involves offering products or services perceived as unique, allowing firms to charge premium prices. Rolls-Royce differentiates through unmatched craftsmanship and prestige, creating a strong brand identity that justifies its high pricing (Gonzales, 2024). Similarly, Apple employs differentiation via design, innovation, and ecosystem integration. Focus Strategy The focus strategy targets a specific market niche. Firms may adopt either cost focus (serving a niche at the lowest cost) or differentiation focus (offering unique products to a niche market). For example, Innocent Drinks targets health-conscious consumers by differentiating with natural, sustainable ingredients (Alhakimi & Al-Ariqi, 2025). Although powerful, Porter warns against being “stuck in the middle”, where firms fail to achieve either low cost or differentiation, resulting in weak competitive positions (Porter, 1985). Business-Level vs Corporate-Level Strategy A distinction exists between business-level and corporate-level strategies. Business-Level Strategy: Determines how a firm competes in a particular industry or market segment. For instance, Samsung competes at the business level with both cost leadership (mass-market smartphones) and differentiation (flagship Galaxy devices). Corporate-Level Strategy: Involves decisions about the overall scope of the firm, such as diversification, mergers, acquisitions, or global expansion. Disney, for example, has diversified into film, theme parks, and streaming platforms, achieving synergy across its businesses (Wheelen & Hunger, 2020). Betchoo (2025) argues that corporate strategy formulation is increasingly tied to sustainability, requiring firms to integrate environmental, social, and governance (ESG) principles into their long-term plans. Role of Core Competencies The concept of core competencies was introduced by Prahalad and Hamel (1990) and remains critical in strategy formulation. Core competencies are the unique capabilities that allow a firm to deliver superior value. For example: IKEA’s core competence lies in efficient design and supply chain integration, allowing it to deliver affordable furniture globally. Amazon’s competence in logistics and digital platforms underpins both its e-commerce dominance and its diversification into cloud services. Core competencies must be rare, valuable, and difficult to imitate, aligning with the resource-based view (RBV) of the firm (Barney, 1991). This ensures sustained competitive advantage beyond temporary market trends. Contemporary Approaches to Strategy Formulation While Porter’s framework and the RBV remain influential, contemporary approaches highlight new factors: Dynamic Capabilities Firms must continually reconfigure resources in response to environmental changes. Teece (2014) emphasises that innovation and adaptability are now central to strategy formulation. Netflix demonstrates this by shifting from DVD rentals to online streaming, and now to content production. Blue Ocean Strategy Instead of competing in saturated markets, firms can create uncontested markets, or “blue oceans” (Kim & Mauborgne, 2015). For example, Cirque du Soleil created a new entertainment category by blending circus acts with theatre, avoiding direct competition with traditional circuses. Globalisation and Digitalisation Global competition and digital transformation demand flexible strategies. Firms like Huawei use global R&D hubs to adapt products to different markets, while Uber leverages digital platforms to scale globally. Challenges in Strategy Formulation Despite its importance, strategy formulation faces challenges: Uncertainty: Global crises such as COVID-19 showed how unpredictable environments can undermine long-term strategies (Cao, 2025). Over-diversification: Corporate strategies that spread resources too thinly may erode core competencies. For example, General Electric’s diversification led to financial strain before its restructuring. Cultural Resistance: Organisational culture may hinder strategy implementation, especially in firms resistant to change (Hitt et al., 2021). Effective formulation must therefore be flexible, evidence-based, and aligned with organisational culture and capabilities. In conclusion, strategy formulation is the backbone of strategic management, enabling firms to navigate competitive markets and achieve sustainable growth. By leveraging Porter’s generic strategies, distinguishing between business and corporate-level strategies, and focusing on core competencies, organisations can create robust competitive advantages. Contemporary perspectives, such as dynamic capabilities and blue ocean strategies, highlight the importance of adaptability and innovation in today’s volatile markets. Ultimately, successful strategy formulation requires a balance of analytical rigour and creative vision, ensuring strategies are both grounded in resources and responsive to external opportunities. Firms like Tesla, Apple, and Amazon illustrate how well-formulated strategies can reshape industries, while failures in strategic alignment highlight the risks of neglecting this critical process. References Barney, J. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99–120. Barney, J.B. and Hesterly, W.S. (2019) Strategic Management and Competitive Advantage. 6th edn. Harlow: Pearson. Betchoo, N.K. (2025) … Read more

In the field of strategic management, conducting an internal analysis is an essential complement to an external environment analysis. While external analysis identifies opportunities and threats in the broader environment, internal analysis focuses on assessing the resources, capabilities, and core competencies that underpin organisational performance (Grant, 2019). This process allows organisations to recognise both their strengths and weaknesses, providing the foundation for developing strategies that align internal potential with external market conditions. Defining Internal Analysis Internal analysis refers to the systematic evaluation of an organisation’s financial health, operational efficiency, human resources, and organisational culture (Hitt et al., 2021). Through this evaluation, managers can determine whether their organisation has the necessary capabilities to pursue chosen strategies. A strong internal analysis not only identifies existing competencies but also highlights areas where improvements are required to achieve long-term competitiveness. For instance, a firm with strong customer service but weak supply chain management may decide to invest in logistics technologies to address inefficiencies, thereby achieving a more streamlined operation (Barney & Hesterly, 2019). Theoretical Foundations: Resource-Based View (RBV) The Resource-Based View (RBV) is one of the most widely used frameworks for internal analysis. It suggests that sustainable competitive advantage arises from unique, valuable, rare, inimitable, and non-substitutable (VRIN) resources and capabilities (Barney, 1991). These may include tangible resources (financial capital, physical assets) and intangible resources (brand reputation, intellectual property, organisational knowledge). According to Grant (2019), effective internal analysis requires not only the identification of resources but also the evaluation of how these are combined into capabilities. For example, Apple’s ability to integrate design, innovation, and supply chain efficiency constitutes a core competence that is difficult for competitors to replicate. Core Competencies and Competitive Advantage Core competencies are those unique activities or processes that provide an organisation with distinct advantages over competitors (Prahalad & Hamel, 1990). They are more than isolated resources; rather, they represent the collective learning and coordination within the organisation. A relevant example can be seen in Toyota’s lean manufacturing system, which integrates operational efficiency, continuous improvement, and employee involvement. This system is recognised as a core competence that has supported Toyota’s sustained competitiveness in the automotive industry (Hitt et al., 2021). Conversely, failing to identify or develop core competencies can lead to decline. Nokia, once a leader in mobile phones, neglected to strengthen its software development capabilities, ultimately losing market share to Apple and Samsung (Johnson et al., 2017). Key Areas of Internal Analysis 1.0 Financial Performance An organisation’s financial health provides critical insights into its ability to fund strategic initiatives. Strong financial performance enables investments in research and development (R&D), marketing, and expansion. Ratios such as profitability, liquidity, and debt levels are commonly analysed (Grant, 2019). For example, Amazon’s consistent reinvestment of profits into technological infrastructure has reinforced its dominance in global e-commerce (Statista, 2023). 2.0 Operational Efficiency Operational efficiency refers to how effectively an organisation uses its resources to deliver products and services. Techniques such as lean management, Six Sigma, and process reengineering are widely applied (Knop, 2025). Companies that achieve operational excellence, such as Dell with its direct-to-consumer supply chain model, often gain significant cost advantages. 3.0 Human Resources and Talent Management Human resources are central to organisational performance. Talented employees, effective leadership, and a positive organisational culture drive innovation and customer satisfaction (Denison, 2020). Internal analysis must therefore assess staff skills, motivation, leadership style, and training programmes. For instance, Google’s investment in employee development and its culture of innovation have become defining strengths (Armstrong, 2012). 4.0 Organisational Culture Organisational culture shapes employee behaviours and influences the implementation of strategy. Schein (2017) argues that culture represents deeply embedded values and assumptions that guide organisational life. A strong culture that aligns with strategic goals enhances performance, whereas cultural misalignment can lead to resistance and inefficiency. For example, Netflix’s culture of freedom and accountability has been identified as a core strength that fuels creativity and adaptability (Reed Hastings, 2020). Tools for Internal Analysis Several analytical tools help managers structure internal analysis: SWOT Analysis: Evaluates strengths, weaknesses, opportunities, and threats, bridging internal and external assessments (Mpundu, 2025). Value Chain Analysis: Developed by Porter (1985), this tool examines how primary and support activities add value, enabling identification of cost advantages or differentiation opportunities. VRIO Framework: Builds on the RBV, assessing whether resources and capabilities are Valuable, Rare, Inimitable, and Organised for sustained competitive advantage (Barney & Hesterly, 2019). For instance, Starbucks’ value chain analysis reveals strengths in customer experience management and branding, but also highlights vulnerabilities in supply chain costs (Johnson et al., 2017). Strategic Implications of Internal Analysis The findings from internal analysis have direct implications for strategy formulation. By recognising strengths, firms can leverage them to exploit external opportunities. Identifying weaknesses allows organisations to implement corrective measures before they become detrimental. For example, Tesla’s strengths in R&D and brand reputation enable it to compete in the electric vehicle market, while its weaknesses in production bottlenecks highlight areas requiring operational improvement (Grant, 2019). Moreover, internal analysis supports strategic flexibility, enabling organisations to adapt to dynamic market conditions. In industries characterised by rapid technological change, such as healthcare and digital services, regular internal evaluation ensures alignment between resources and strategic ambitions (Schiffelers et al., 2025). Challenges in Conducting Internal Analysis Despite its importance, internal analysis faces several challenges: Bias and Subjectivity – Managers may overestimate strengths or underestimate weaknesses. Dynamic Capabilities – Resources and capabilities evolve; what constitutes a strength today may become obsolete tomorrow (Teece, 2018). Integration with External Analysis – Internal insights must be aligned with external conditions to avoid strategic misfit. For example, Kodak possessed strong internal capabilities in film technology, but its failure to adapt these competencies to the digital revolution led to decline. Internal analysis plays a vital role in strategic management by identifying an organisation’s strengths, weaknesses, resources, capabilities, and core competencies. Using frameworks such as the Resource-Based View, VRIO, SWOT, and Value Chain Analysis, firms can evaluate how well their internal environment supports long-term strategic objectives. By aligning internal resources with external opportunities, organisations … Read more