Internal Environment
There are many influences that need to be considered that apply to the internal environment to an organisation. These influences include organisational, cultural, financial, research and development, production, marketing and resourcing.
Organisational
The structure of the organisation needs studying in terms of how does the customers needs get met, what are the channels of communication, how is change facilitated and how does the organisation achieve coordination.
The decision making process has to be understood to make sure that decisions are made correctly and implemented adequately. The decisions also need to be adequate for operational purposes as well as strategic purposes.
The management chain bears a lot of influence over the organisation and it has to be investigated to ensure that the managers are encouraging initiative yet maintaining control, and that they are both effective and efficient.
Cultural
The culture of an organisation drives a company forward and it needs to be assessed whether the mission statement reflects what the organisation believes or wants, and that the organisational ethos is understood and communicated effectively. Management style in the culture of the organisation needs to enable the achievement of goals and motivate staff.
Financial
The profitability of an organisation is to be assessed to see if the company presents targets and performance satisfactory, and whether there is a balance between retained and shared profits. There needs to be a growth in assets that is acceptable for the organisation, and key ratios such as the operating income and net assets needs to be satisfactory. The cash flow has to be analysed to identify what the sources of cash are and whether it is negative or positive.
Research and Development
If an organisation sells products is there enough emphasis being put on product development and are there sufficient new products or designs being launched. The budget for R&D needs to be looked into and decided which is best long term research or short term research. Any new technology that the organisation has introduced has to seen to be giving a return on investment.
Production
The production levels need to be assessed in terms of output and whether the organisation is meeting targets in both productivity and quality standards. Stock levels need to be satisfactory along with lead times and quality, and it also needs to be evaluated if new technology has been implemented or needs to be implemented to achieve better levels of production.
Marketing
The marketing of the company’s products needs to be able to meet customer needs and work in comparison to competitors. The market share needs to be analysed to see if it is growing, stable or declining and that markets are being developed and targeted with the right marketing. The profitability of the product or brand needs to be analysed with the pricing structure which will lead to the apportionment of costs to the cost of sales in terms of promotion or direct sales. The overall turnover of the product or service will be seen from the overall sales figure in terms of targets.
Resourcing
Resourcing takes into account such things as purchasing costs and how the purchasing of the business is operated. Human resources such as staff retention, wage and salary costs and staff training and promotion need to be assessed. Also if new projects need to be funded then the resources available have to be investigated, or the company may require to use long or short term loans.