The Internal Environment

Introduction

• How and why do managers conduct an internal analysis of their firms?

A firm's internal environment is illustrated in Exhibit 8.4 by the innermost orange circle. The internal environment consists of members of the firm itself, investors in the firm, and the assets a firm has. Employees and managers are good examples; they are firm members who have skills and knowledge that are valuable assets to their firms. Evaluating a firm's internal environment is not just a matter of counting heads, however. Successful firms have a wide range of resources and capabilities that they can use to maintain their success and grow into new ventures. A thorough analysis of a firm's internal situation provides a manager with an understanding of the resources available to pursue new initiatives, innovate, and plan for future success.

Source: OpenStax, https://openstax.org/books/principles-management/pages/8-5-the-internal-environment
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