UNIT II

I. Formulating a Strategy
It involves the following components or steps:
1. External environment analysis
2. Internal Environment analysis (Organizational appraisal)
3. Formulating Corporate-level strategy
4. Formulating Business-level strategy
5. Strategic Analysis
6. Strategic choice or decision making
7. Preparing Strategic Plan

What is Environment?
The totality of all surroundings in which an organization operates is called its business environment. All
events, issues, situations or entities together form the business environment.
All organizations operate in an environment that has a direct or indirect impact on their operations and
performance. The factors that constitute this environment may be within the organization’s control or
beyond. However, if it impacts the organization in any manner, then it is a part of its environment.
Characteristics of environment
1. Totality: Business environment is the sum totals of all those factors/forces which are
available outside the business and over which the business has no control. It is the group
of many such forces that is why, its nature is of totality.
2. Complex and inter-related: The different factors of business environment are co-related.
For example, let us suppose that there is a change in the import-export policy with the
coming of a new government. In this case, the coming of new government to power and
change in the import-export policy are political and economic changes respectively. Thus,
a change in one factor affects the other factor.
3. Specific forces and general forces: The forces present outside the business can be divided
into two parts – specific and general.
(i) Specific: These forces affect the firms of an industry separately, e.g.,
customers, suppliers, competitive firms, investors, etc.
(ii) General:
These forces affect all the firms of an industry equally, e.g., social, political,
legal and technical situations.
4. Dynamic: As is clear that environment is a mixture of many factors and changes in some
or the other factors continue to take place. Therefore, it is said that business environment
is dynamic.
5. Multi-faceted relativity: Business environment is related to the local conditions and this is
the reason as to why the business environment happens to be different in different
countries and different even in the same country at different places.
6. Far-reaching impact: The impact of any changes in the environment can be seen like a
ripple or wave that impacts the entire value chain of the organization. The impacts can be
long term in terms of time period that may be required to overcome a challenge, as well
as broad in nature, which implies that more than one business units can be impacted.
7. Uncertainty: Nothing can be said with any amount of certainty about the factors of the
business environment because they continue to change quickly. The professional people
 who determine the business strategy take into consideration the likely changes
beforehand.

Importance of business environment

There is a close and continuous interaction between a business and its environment. This interaction helps in
strengthening the business firm and using its resources more effectively. The business environment is
multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of
the business. To be more specific, proper understanding of the social, political, legal, and economic
environment helps the business in the following ways:

Identifying Firms’ Strengths and weaknesses: Business environment helps in identifying the individual
strengths and weaknesses in view of the technological and global developments.

Determining Opportunities and Threats: The interaction between the business and its environment would
identify opportunities for and threats to the business. It helps the business enterprises in meeting the
challenges successfully.

Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of
growth for the business firms. It enables the business to identify the areas for growth and expansion of their
activities.

Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business
challenges. The managers are motivated to continuously update their knowledge, understanding, and skills
to meet the predicted changes in realm of business.

Image Building: Environmental understanding helps the business organisations in improving their image by
showing their sensitivity to the environment within which they are working. For example, in view of the
shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their
own requirement of power.

Meeting Competition: It helps the firms to analyse the competitors’ strategies and formulate their own
strategies accordingly.

GENERAL ENVIRONMENT (Macro env) and RELEVANT ENVIRONMENT (Micro env)

Some factors of the environment are common to all organizations and impact their operations alike. Some
others impact only a selective group of industries or organizations.
Some factors may have a strong and long-lasting impact on the organizations while some may only have a
small impact.
All these factors together constitute the general environment of the organization. However, there is a subset
of this general environment that has a major impact on the organization. These factors are more important,
per se, to the organization than others. These particular set of factors in the nearby environment constitute its
relevant environment.
Therefore, relevant environment is that part of the general environment which has a greater impact on the
organization, compared to other factors, and should be the main focus of strategy management.

Relevant environment can also be called Micro environment.

Micro environment is the environment which is close to business and affects its capacity to work. It consists
of Suppliers, Customers, Market Intermediaries, Competitors and Public.

The environment that affects an organization can be also classified into

I. External environment: The sum total of all individuals, institutions and other forces that are outside
the control of a business enterprise but the business still depends upon them as they affect the overall
performance and sustainability of the business. They help in determining the opportunities and
threats for the organization.
II. Internal Environment: An organization's internal environment is composed of the elements within
the organization, including current employees, management, and especially corporate culture, which
defines employee behaviour. These are considered to determine the strengths and weaknesses of the
firm.

Thus, anything within the control of an organization that impacts its performance is a part of its internal
environment, and anything that impacts the organization but is not completely under its circle of control is
called external environment.
A study of both the environments together gives a complete picture of where and how an organization needs
to concentrate in order to survive and grow in their particular industry.
This is done by identifying the Strengths & Weaknesses from the internal environment and Opportunities &
Threats from the external environment. It is generally referred to as SWOT Analysis.
SWOT Analysis
The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of
situations in business and organizations. SWOT is an acronym for Strengths, Weaknesses, Opportunities,
Threats.
A SWOT analysis is a subjective assessment of data which is organized by the SWOT format into a logical
order that helps understanding, presentation, discussion, and decision-making. The four dimensions are a
useful extension of a basic two heading list of pro's and con's
A SWOT analysis can be used for all sorts of decision-making, and the SWOT template enables proactive
thinking, rather than relying on habitual or instinctive reactions.
 Strengths Weaknesses

Opportunities Threats

Strengths and Weaknesses - The internal environment - the situation inside the company or organization:
Factors tend to be in the present. For example: factors relating to products, pricing, costs, profitability,
performance, quality, people, skills, adaptability, brands, services, reputation, processes, infrastructure, etc.

Opportunities and Threats - The external environment - the situation outside the company or organization:
Factors tend to be in the future. For example: factors relating to markets, sectors, audience, fashion,
seasonality, trends, competition, economics, politics, society, culture, technology, environmental, media,
law, etc.

Studying the SWOT analysis is a strategic planning technique which allows organizations to formulate
effective strategies by
a. Capitalizing opportunities
b. Neutralizing threats
c. Utilizing strengths
d. Overcoming weaknesses

EXTERNAL ENVIRONMENT ANALYSIS

All factors that affect the functioning of an organization in a positive or negative manner, but are outside the
organization constitute its external environment.
These factors can broadly be classified into
1. Economic
2. Socio-cultural
3. Regulatory / Legal
4. Technological
5. Political
6. Global
7. Market
8. Supplier

This categorization is often referred to as PESTEL analysis, PESTEL being the acronym for all factors.

PESTEL Analysis
PESTEL is an important tool used for market and environmental analysis and to support strategic decision
making.
The PESTEL framework is an analytical tool used to identify key drivers of change in the strategic
environment. PESTEL analysis includes Political, Economic, Social, Technological, Legal, and
Environmental factors, but other variants include PEST, PESTLIED (including International and
Demographic factors), STEEPLE (including Ethical factors), and STEEPLED (including Education and
Demographic factors)
PORTER’S 5-FORCES MODEL
As a method of studying the challenges that external environment poses to an organization, Michael E Porter
suggested the 5 forces model. It identifies and explains the 5 different forces of the external environment
that can create challenges for any organization.

1. Threat of new entrants:

The threat of having fresh competition with new organizations entering the same market, targeting
same customers with similar products.
Entry barriers for new firms protect existing firms from this type of competition. Entry barriers may
include high capital requirement, government licensing, access to distribution channel etc.
2. Bargaining power of suppliers:
When suppliers of the firm (that provide raw materials to the organization) are able to control the
pricing and quality of an organization’s products by either increasing the costs or reducing the
quality, it is said that the bargaining power of suppliers is high. This generally happens when the
demand of raw materials is high and there are limited suppliers available.
3. Bargaining power of buyers:
Bargaining power of buyers (customers) is said to be high when the customers are able to affect the
pricing and market of the organization. This generally happens when there are many competitors in
the market, with low demand, and customer has many choices.
4. Threat of substitutes:
This is a challenge that organizations face from other organizations that are not producing the same
goods, but producing substitutes of what the organization offers to its customer. Substitutes often
become a challenge when they demolish a specific product or technology with new upgrades.
5. Rivalry among existing competitors: Direct competition from other organizations with whom the
market is currently being shared.

In order to apply the model appropriately, organizations follow the below steps:

 Step 1. Gather the information on each of the five forces

 Step 2. Analyse the results and display them on a diagram
 Step 3. Formulate strategies based on the conclusions
APPROACHES TO EXTERNAL ENVIRONMENTAL SCANNING
1. Systematic: Continuous process of monitoring the external environment, generally carried out by
large enterprises, by using both primary and secondary data.
2. Ad hoc: Process to study external environment only when required, often done as a result of crisis
management, usually carried out by small scale organizations.
3. Processed form: Environmental study that makes use of secondary data only, to identify the impact
of external environment.
Structuring External Environment analysis
Once the analysis of external environment of an organization is complete, it is necessary to represent
it in a structured format that allows appropriate visibility of the outcome of the study and enables
planning (to capitalize the opportunities and neutralize the threats).
A popular structure used to represent the external environment analysis is called ETOP.
ETOP: Environmental Threat and Opportunity Profile
ETOP(Environmental Threat and Opportunity Profile) is a technique to structure environmental issues.
ETOP involves:
 Dividing the environment into different sectors.Each sectors can be subdivided into sub sectors.
 Analyzing the impact of each sector and subsector on the organization.
 Describe the impact in the form of a statement.
It involves listing down all the factors that constitute the external environment, followed by a detailed listing
of each sub-factor within the broad categories of factors. An analysis is done to determine the impact of each
sub-factor on the organization, and classified as a threat or opportunity.
An ETOP chart generally looks like below:

Advantage of ETOP
 It provides a clear view of which sector and sub sectors have favourable impact on the organization.
It helps interpret the result of environment analysis.
 The organization can assess its competitive position.
 Appropriate strategies can be formulated to take advantage of opportunities and counter the threat.

ORGANIZATIONAL APPRAISAL (INTERNAL ENVIRONMENTAL ANALYSIS)

What is Organizational appraisal?
It is the Process of monitoring an organization’s internal environment to identify its strengths and
weaknesses that may influence the firm’s ability to achieve goals.
An internal analysis is an exploration of the organization's competency, cost position and competitive
viability in the marketplace.
The internal environment of any organization is a composite mix of its
 Resources
o Land, Labor and Capital
o Expertise and skill
o Advanced technology
o Leadership and management
o Stable internal processes

 Behaviour
o Culture
o Quality of leadership
o Work environment
o Power and politics
A complete study and analysis of all the resources available to an organization, be the resources in any of the
forms mentioned above, is called a resource audit. It is conducted to identify the strengths and weaknesses
of the organization, pertaining to availability of resources.
Together, the resources and behaviour of the organization create a synergy that develops into the respective
strengths or weaknesses of the organization.
From the synergistic effect of the strengths, various competencies are determined that the organization uses
to create a place for itself in the competitive market.
Some of these competencies might be better than others, and form the basis of all operations within the firm.
They are called core competencies.
Any competency that sets the organization apart from its competitors, and makes it different from others, is
called distinctive competency.
What is Organizational Capability?
Organizational capability is its ability to utilize its strengths, overcome the weaknesses, exploit opportunities
and face the threats. Therefore, it is a clear indication of the health of an organization, and represents its total
internal environment.
Organizational Capability Factors
There are 6 major factors that together form the internal environment of an organization. Each factor has
various sub-factors that define the ways in which the organization operates. A study of these factors allows
the management to identify the critical areas or activities that have a direct impact on the internal
environment of the organization.
1. Finance
a. Sources of funds
b. Use of funds
c. Management of funds

2. Marketing
a. Product
b. Price
c. Place
d. Promotion
e. Integrative factors

3. Human Resources
a. Personnel systems
b. Organization and employee characteristics
c. Industry relations

4. Operations
a. Production systems
b. Operations and control systems
c. R&D systems

5. Information management
a. Acquisition and retention of information
 b. Processing and synthesis of information
c. Retrieval and usage of information
d. Transmission and dissemination of information
e. Integrative factors

6. General management
a. General management
b. General managers
c. External relationships
d. Internal work environment

Together, these 6 functional areas constitute the internal environment of any organization. A study of these
6 functional areas is called FUNCTIONAL AREA PROFILE.

Functional area profile and resource development matrix:

Hofer and Schendel have developed this technique to make a comparative analysis of a firm’s own resources
deployment position and focus of efforts with those of competitors. First the technique requires the
preparation of a matrix of functional areas with common features. For e.g. focus of financial outlay, physical
resources, organizational systems and technological capability. Second a matrix is prepared showing
deployment of resources and focus of effort over a period of time. This profile shows how key functional
areas stand in relation to each other and as compared to the competitors with regard to deployment of
resources and the focus of efforts in each functional area.

The matrix gives data pertaining to resources deployment in various functional areas over a period of time. It
also shows how the focus of efforts has changed within a time frame. Strategies can draw their own
conclusions based on past experience, current trends and future expectations. They can find out whether the
firm is able to strengthen the areas of advantage or dissipate its energies over a period of time. While
drawing comparisons it is advisable to compare firms, which are in the same phrase of product life cycle.

Approaches to Organizational Appraisal

A. Systematic – done on a continuous basis, usually carried out in large enterprises
B. Ad hoc – done based on requirement, may be crisis-driven, done by organizations that cannot afford
a continuous environment evaluation.

Methods of Organizational appraisal

A. INTERNAL ANALYSIS

I. VRIO framework
The VRIO Framework or VRIO Model is part of the Resource-Based View (RBV), which is a
perspective that examines the link between a company’s internal characteristics and its performance. The
key concepts within this view are therefore Firm Resources and Sustainable Competitive Advantage.
Firm resources can be defined as ‘all assets, capabilities, organizational processes, firm attributes,
information and knowledge controlled by a firm that enables it to improve its efficiency and
effectiveness. Resources are often classified into categories such as tangible (e.g. equipment, machinery,
land, buildings and cash) and intangible (e.g. trademarks, brand reputation, patents and licenses)
or physical, human and organizational resources. In order for companies to transform these resources
 into sustainable competitive advantage, resources must have four attributes that can be summarized into
the VRIO framework. These attributes are:
 Valuable
 Rare
 Inimitable
 Organized

All resources and capabilities of the organization are evaluated to determine where they can be placed as per
these four attributes. This allows the organizations to classify each resource and capability appropruiately
while simultaneously deriving what can ultimately become a sustained competitive advantage.

II. Value Chain Analysis:

A company is in essence a collection of activities that are performed to design, produce, market, deliver and
support its product (or service). It’s goal is to produce the products in such a way that they have a greater
value (to customers) than the orginal cost of creating these products. The added value can be considered the
profits and is often indicated as ‘margin’. A systematic way of examining all of these internal activities and
how they interact is necessary when analyzing the sources of competitive advantage. A company gains
competitive advantage by performing strategically important activities more cheaply or better than its
competitors. Michael Porter’s value chain helps disaggregating a company into its strategically relevant
activities, thereby creating a clear overview of the internal organization. Based on this overview managers
are better able to assess where true value is created and where improvements can be made.
Primary activities
The first are primary activities which include the five main activities. All five activities are directly involved
in the production and selling of the actual product. They cover the physical creation of the product, its sales,
transfer to the buyer as well as after sale assistance. The five primary activities are inbound
logistics, operations, outbound logistics, marketing & sales and service. Even though the importance of each
category may vary from industry to industry, all of these activities will be present to some degree in each
organization and play at least some role in competitive advantage.
Support Activities
The second category is support activities. They go across the primary activities and aim to coordinate and
support their functions as best as possible with each other by providing purchased inputs, technology, human
resources and various firm wide managing functions. The support activities can therefore be divided
into procurement, technology development (R&D), human resource management and firm infrastructure.
The dotted lines reflect the fact that procurement, technology development and human resource management
can be associated with specific primary activities as well as support the entire value chain.

Although value activities are the building blocks of competitive advantage, the value chain is not a
collection of independent activities. Rather, it is a system of interdependent activities that are related
by linkages within the value chain. Decisions made in one value activity (e.g. procurement) may affect
another value activity (e.g. operations). Since procurement has the responsibility over the quality of the
purchased inputs, it will probably affect the production costs (operations), inspections costs (operations) and
eventually even the product quality. In addition, a good working automated phone menu for customers
(technology development) will allow customers to reach the right support assistant faster (service). Clear
communication between and coordination across value chain activities are therefore just as important as the
activities itself. Consequently, a company also needs to optimize these linkages in order to achieve
competitive advantage. Unfortunately these linkages are often very subtle and go unrecognized by the
management thereby missing out on great improvement opportunities.
It allows a more structured approach of assessing where in the organization true value is created and where
costs can be reduced in order to boost the margins. It also allows to improve communication between
departments. Combining the Value Chain with the VRIO Framework is a good starting point for an internal
analysis.

III. Quantitative analysis

a. Financial analysis
Analysis and Interpretation of financial statements refers to the process of determining the significant
operating and financial characteristics from the accounting data with a view to getting an insight into the
activities of an enterprise.
By establishing a strategic relationship between the items of a balance sheet and income statement and
other operative data, the financial analysis [as -it is simply called] explains the meaning and significance
of such items.
Some of the common tools / methods of Financial analysis are:
Financial ratios – liquidity ratio, profitability ratio, Equity Ratio, Solvency etc.
EVA – Economic value added – computed as (Profit after tax - Cost of capital)
ABC – Activity based cost accounting – The process of determining major cost drivers for each base
level activity in the primary value chain and establishing a cost structure accordingly

b. Non-financial
Non-financial performance measures serve as leading indicators of future financial performance and
provide insight as to organization’s impact on stakeholders and society. They provide deeper insights
into the inner workings of business. They can be used to understand why certain financial results occur
and what needs to be changed to improve financial metrics. Non Financial factors include any
performance indicators that can be quantified but cannot / should not be expressed monetarily. Few
examples are cycle time of production, employee turnover rate, advertisement recall rate, market share,
customer retention rate etc.

IV. Qualitative analysis

Qualitative analysis enables leaders of the organization to identify important aspects within the
organization which are non quantifiable, yet have a major impact on the performance of the firm. This
analysis includes all factors that cannot be quantified, generally including intangible assets of the
organization, like employee morale, org culture, good will and brand value etc.

B. Comparative analysis

In this form of internal environment analysis, the organizations perform a comparative study of their
current processes and performance. Comparisons may be done with various alternatives, forming the
basis of three types of analysis:

I. Historical Analysis
Comparison of current performance and processes is done with past data and trends of the
same organization. This implies that the organization compares its current performance with how it
had performed earlier.

II. Industry norms

In this, comparison of organization’s current performance is done with similar organizations
in the industry that operate at the same level and same core value system. This gives a fair
idea of where we stand in comparison to competitor organizations.

III. Benchmarking
In this system, a comparison is made with those organizations that are leaders in a particular
area, which set benchmarks.
Benchmarks are reference points that are used to compare the performance of an organization
against the performance of others. These benchmarks can be comparing processes, products or
operations, and the comparisons can be against other parts of the business, external companies (such
as competitors) or industry best practises. Benchmarking is commonly used to compare customer
satisfaction, costs and quality. Benchmarking, whether internal or external, is used in three key
ways.
 They are:
 Process benchmarking: Better understanding your processes, comparing performance against internal
and external benchmarks, and finding ways to optimise and improve your processes; understanding
how top performers complete a process; find ways to make one’s own processes more efficient,
faster and more effective.
 Strategic benchmarking: Comparing strategies, business approaches and business models in order to
strengthen your own strategic planning and determine your strategic priorities; understand what
strategies underpin successful companies (or teams or business units) and then comparing these
strategies with your own to identify ways you can be more competitive.

 Performance benchmarking: Collecting information on how well you’re doing in terms of outcomes
(which could mean anything from revenue growth to customer satisfaction) and comparing these
outcomes internally or externally.

C. Comprehensive analysis
I. Key factor rating
This method takes into account the key factors affecting organizational functioning.
Information regarding the key factors is generally collected after a series of meetings,
discussions and surveys. Answers in each functional area are being closely examined with a
view to rate the key factors. The relative impact of each factor (favorable or unfavorable) on
a particular result is also examined using mathematical models. This information gives clarity
on how the organization is performing.

II. Business Intelligence system

It is defined as a broad category of application and technologies for gathering, storing,
analyzing and providing access to data to help enterprise user to make better business
decisions.
This method encompasses the use of technology to identify areas of competence as well as
the areas that need improvement within the firm. It involves the use of various apps and
software that act as enablers for the top management, e.g. MIS, DSS (Decision Support
System) and OLAP (Online Analytical Processing)

III. Balanced scorecard

The Balanced Scorecard (BSC) is a business framework used for tracking and
managing an organization’s strategy. This framework is based on balance between leading
and lagging indicators, which can respectively be thought of as the drivers and outcomes of
a company’s goals to get a comprehensive view of how the organization is doing from all
relevant perspectives, providing a 360° view of the organization’s performance. The balanced
scorecard is a strategic management tool that views the organization from four different
perspectives as follows:

1. Financial goals — The perspective of your shareholders – “What financial goals do we have that
will impact our organization?”
2. Customer goals — What your customers experience and perceive – “What things are important to
our customers, which will in turn impact our financial standing?”
3. Internal Process goals — The key processes you use to meet and exceed customer and shareholder
requirements – “What do we need to do well internally, in order to meet our customer goals, that will
impact our financial standing?”
4. Learning and growth goals — How you foster ongoing change and continuous improvement –
“What skills, culture, and capabilities do we need to have in our organization in order to execute on
the process that would make our customers happy and ultimately impact our financial standing?”
(Refer to Unit 1 for more details)

McKinsey’s 7s Framework
This is an organizational appraisal tool to assess and monitor changes in the internal situation of an
organization. It helps to analyse how well an organization is positioned to achieve its intended
objective. The model is based on the theory that there are seven elements that need to be aligned and
mutually reinforcing for an organization to perform well. These elements are: structure, strategy,
systems, skills, style, staff and shared values, called the 7s.

The seven elements are inter-dependent on each other, and the success of any organization is
dependent on each of the seven elements individually, as well as their co-functionality.
The seven elements are classified into hard and soft elements, as follows:

Hard Elements
 Strategy – Purpose of the business and the way the organization seeks to enhance its
competitive advantage
The strategy is the plan deployed by an organization in order to remain competitive in its
industry and market. An ideal approach is to establish a long-term strategy that aligns with
the other elements of the model and clearly communicates what the organization’s objective
and goals are.
 Structure – Division of activities; integration and coordination mechanisms.
The structure of the organization is made up of its corporate hierarchy, the chain of
command, and divisional makeup that outlines how the operations function and interconnect.
In effect, it details the management configuration and responsibilities of workers.
 Systems – Formal procedures for measurement, reward and resource allocation.
 Systems of the company refer to the daily procedures, workflow, and decisions that make up
the standard operations within the organization.

Soft Elements
 Shared Values – The morals and code of conduct that the employees share being a part of one
organization
Shared values are the commonly accepted standards and norms within the company that both
influence and temper the behavior of the entire staff and management. This may be detailed
in company guidelines presented to the staff. In practice, shared values relate to the actual
accepted behavior within the workplace.
 Skills – The organization's core competencies and distinctive capabilities.
Skills comprise the talents and capabilities of the organization’s staff and management, which
can determine the types of achievements and work the company can accomplish. There may
come a time when a company assesses its available skills and decides it must make changes
in order to achieve the goals set forth in its strategy.
 Staff – Organization's human resources, demographic, educational and attitudinal
characteristics.
Staff refers to the personnel of the company, how large the workforce is, where their
motivations reside, as well as how they are trained and prepared to accomplish the tasks set
before them.
 Style – Typical behaviour patterns of key groups, such as managers, and other professionals.
Style speaks to the example and approach that management takes in leading the company, as
well as how this influences performance, productivity, and corporate culture.

Structuring an Organizational appraisal

Once the analysis of internal environment of an organization is complete, it is necessary to represent

it in a structured format that allows appropriate visibility of the outcome of the study and enables
planning (to utilize the strengths and overcome the weaknesses).

There are two popular ways to represent the results of Organizational appraisal, namely:

I. Strategic Advantage Profile

SAP tries to find out organizational strengths and weaknesses in relation to certain critical
success factors (advantage factors or competence factors) within a particular industry. Many
industries have relatively small but extremely important set of factors that are essential for
successfully gaining and maintaining competitive advantages. Known as critical success
factors (CSFs), they have significant bearing on the overall growth of a firm within the
industry. Research has identified four major sources of CSFs in general:
 Industry characteristics
 Competitive positions
 General environment
 Organizational development

Similar to ETOP, in this technique, a list of all the factors that constitute the internal
environment is identified. The table represents if the impact of the factor is a strength or a
weakness, and describes the impact of the strength or weakness. This allows the management
to build necessary plans to utilize that strength or overcome that weakness.
II. Organizational Capability Profile
It is a list of all capability factors that constitute the internal environment of the organization,
along with a rating from -5 to +5, representing whether the particular factor is a strength or a
weakness for the organization, and to what degree. This allows the management to build
necessary plans to utilize that strength or overcome that weakness.