For the development of a company, it has the duty to implement various strategies. Among these is the internal diagnosis. This is one of the axes of analysis of a company’s environment recommended by the SWOT matrix. So, what should we know concretely about the internal diagnosis in a company? What steps are needed to conduct an internal diagnosis? These are some of the points we will address in this article.
Internal Diagnosis: What to Know?
Conducting an internal diagnosis means taking stock of all the activities carried out by the company. This will allow it to identify its strengths as well as its weaknesses. This will enable it to establish an action plan through which it will define areas for improvement.
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Thus, the success of this diagnosis will contribute to strengthening work strategies to optimize productivity and competitiveness. This is precisely why it is advisable to pay particular attention to the macro environment of a company. At the end of this effort, the company will finally be able to stand out from its competitors by developing various skills internally.
What Steps to Take to Conduct an Internal Diagnosis?
To conduct an internal diagnosis, the company must examine the different resources that compose it. This must be done meticulously. Indeed, the examination should not only take into account the internal success factors.
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On the contrary, a deep analysis should be reserved for other factors, particularly the difficulties. In any case, the goal is to correct any dysfunctions as early as possible for the continuation of activities.
Furthermore, to conduct an internal diagnosis, several steps need to be implemented. Let’s discover them in the following sections of this article.
Examine the Internal Environment of the Company
The first step in conducting an internal diagnosis is to carry out an internal strategic diagnosis. Certain stakeholders may be involved in this analysis. Among others, we have the company leader, a company executive, or even an external person.
The task assigned to them is the evaluation of the company as a whole. Among the points that will be addressed are the production process related to the main activities or various support activities. To do this, it will be necessary to measure the social climate of the company to gather the opinions of employees or each segment on specific topics.
Analyze the Company’s Material and Immaterial Resources
All companies have material and immaterial assets. To better conduct your diagnosis, it will be necessary to list them.
As material resources, we can mention:
- Physical resources: these include the company’s production site, available equipment, the condition of this equipment, the company’s production capacity, etc.;
- Also, financial resources: this refers to all information related to cash flow, financial results up to the date of the diagnosis, the financial weight of the company, etc.;
- Human resources: these concern the number of employees, their skills, the various qualifications of the collaborators, etc.
The immaterial resources, on the other hand, are numerous. However, among the most important, we have:
- Brand image: this includes the marketing aspect and the company’s reputation regarding its services;
- Management: production procedures, work processes, service quality, etc.;
- Exploited technology: patents.
Analyze the Value Chain
To gain a competitive advantage, it is essential to focus the value chain analysis on the most profitable activities. This is indeed what the Porter model recommends. Thus, we can categorize these activities as either primary or support activities.
Indeed, the 5 primary activities are:
- Logistics and supply of raw materials;
- Transformation of raw materials;
- Marketing of the obtained products;
- Sales and all associated marketing;
- Services related to the sold product: exchange, repair, etc.
There are 4 support activities. They are:
- Administrative service;
- HR management;
- Innovations;
- Purchasing of materials for the benefit of primary activities.
Moreover, other tools can be used to conduct an internal diagnosis. The VRIO method and the BCG matrix are some of them.