Discussion Reply: Internal Environment, Power / Weakness, and Decision ModelsYou will reply to one of your classmate’s thread.Minimum of 250 words in the body.Minimum of 2 sources from the literature in addition to course texts.Use bolded headings below in the reply.BUSI 770Page 8 of 12Current APA format must be used.Use the following Outline:• Summary – Sumarize the author’s original thread in no less than 125 words.• Critique – Discuss what you agreed with, did not agree with and why in no less than 125words.Support your factual assertions with citations
Internal Environment, Power / Weakness, and Decision Models
Introduction
A company’s internal environment is comprised of both tangible assets, such as equipment and financial resources, as well as intangible elements such as culture, intellectual property, and organizational capabilities. Combined, this forms the very foundation of its competitive position. In order to fully understand the factors that are critical for understanding how well resources are utilized and where the strategic advantages lie, there needs to be a systematic and intentional evaluation of certain internal factors. This evaluation involves multiple analyses, including financial metrics, value chain analysis, and frameworks like VRIN/VRIO, to identify resources with potential for sustainable advantage. However, assessment must go beyond surface-level inventory to include prioritization and interpretation through decision models that refine strategic focus.
When combined with decision models and frameworks like the Eisenhower Matrix, Pareto Principle, and Cognitive Dissonance Model, the SWOT analysis helps leaders at various levels to not only recognize their internal strengths and weaknesses but also how to address cultural and operational dynamics that inevitably impact individual and organizational performance. This paper is set to explore how each evaluation and decision-making model in their own right provides valuable individual insights, but it is in their combined and systematically blended application that delivers the most valuable foundation for informed, adaptable, strategic, and most importantly, actionable decisions that drive long-term success.
Process: Evaluating the Internal Environment
Context and internal factors shape nearly every aspect of how a company operates, which is why evaluating a company’s internal environment is essential. In order to conduct a thorough evaluation, there must be a systematic and intentional look at all factors that will or can influence operations. This spans from tangible and intangible resources. Keller (2012) points out that positioning work with a clear purpose not only helps reinforce cultural ties but also strengthens leadership. While an assessment typically begins with financial metrics, it needs to extend beyond the numbers. It needs to account for the underlying values that drive engagement, adaptability, and long-term success.
Key resources are then identified and assessed for how they are applied. Gamble et al. (2021) note that capabilities result from the effective use of resources, and the value chain analysis reveals where value is created across internal functions. Dynamic capabilities assess a firm’s ability to adapt and renew resources.
Gamble et al. (2021) further explain how a company’s ability to compete in the marketplace depends on how well it aggregates and applies its internal resources and capabilities. These resources and capabilities are assessed through the Valuable, Rare, Inimitable, and Non-substitutable (VRIN) test. Simply put, the more criteria a resource meets, the more likely it is to sustain a long-term competitive advantage. Murcia et al. (2022) improve this model by introducing a calculated approach that addresses the oversimplification of the binary yes/no responses, which placed equal weight on resources of varying strengths. By applying a 10-point scoring system across the VRIO using the Multi-Criteria Decision Analysis (MCDA), it provides more of a methodical and unbiased method for evaluating a company’s resources and capabilities. Companies that meet all four criteria are likely to gain and sustain a competitive advantage.
The process concludes with a SWOT analysis, which integrates the internal insights with external factors that guide the strategic comprehensive approach that helps organizations and leaders to identify which internal strengths and weaknesses are critical to sustaining a long-term competitive edge.
Strategic Thinking: Key source of Power / Weakness
One of the main sources of strength for a company often comes from its core competencies, things like proprietary technology, brand reputation, or intellectual property. Depending on the market landscape and how competitive the value chain is, these core competencies can either be a major strategic asset or a hidden risk point, depending on a few areas such as how well they align with evolving customer needs, whether or not they are scalable, and how vulnerable they are to imitation or obsolescence. Take proprietary technology, for instance: it can give a company a real edge by offering something others simply cannot replicate, like Apple’s iOS operating system. That kind of advantage does not simply help in the short term; it can also raise the bar so high that it inadvertently causes a natural barrier to entry, making potential competitors think twice before attempting to enter the market.
Gamble et al. (2021) underscore that core competencies stem from resources and capabilities that are defined by the VRIN criteria. For example, when the VRIN, or its practical extension, the VRIO, is assessed and viewed with an accurate open lens, it provides a direction towards building and maintaining a sustainable competitive advantage. Similarly, Rumelt (2011) contends that sources of power, such as distinctive capabilities or strategic leverage points, are critical because they enable organizations to shape their competitive landscape. In military terms, this is similar to ‘shaping the battlefield’. This is where the operational environment is prepared in a way that one is able to respond to threats and seize opportunities from a position of strength.
A key source of weakness may stem from outdated technology or inefficient processes, which can hamper a company’s ability to compete and adapt. Timely recognition of such internal vulnerabilities can mean all the difference between survival and failure. As Rumelt (2011) argues, effective strategy begins with a clear diagnosis of strategic challenges. Without accurately identifying and assessing the weaknesses, firms risk mismanaging resources or failing to respond to market changes. Either way, it threatens their long-term viability.
Irwin et al. (2022) reinforce this view by distinguishing between ordinary and dynamic capabilities. Ordinary capabilities are the fundamental areas of what the firm does while dynamic capabilities are the higher-order capabilities that enable a firm to sense and seize new opportunities regardless of the external conditions. To be clear, dynamic capabilities enable a firm to respond to changing external conditions; they do not ignore them. Their research shows that firms with strong dynamic capabilities possess the capacity to adapt and thrive amid disruptions, while others either fail or continue to struggle. This underscores the strategic importance of identifying capability gaps as sources of internal weakness and prioritizes the development of adaptive, innovation-driven competencies, especially during more stable periods.
For example, ordinary capabilities are like individuals who live paycheck to paycheck. They may live fairly well under stable conditions but lack the resources to withstand sudden hardships. When disruptions strike, these firms often face difficult trade-offs or risk failures altogether. It is here that the fundamental fact underscores the importance of identifying internal capability gaps and prioritizing the development of adaptive and innovative ways of identifying strengths and weaknesses.
Decision Model
I agree with Gamble et al. (2021) when they place SWOT as the basis for crafting a strategy that capitalizes on a company’s strengths. SWOT is a diagnostic tool that identifies and categorizes internal strengths. While I understand they do not specifically recommend any other decision models to pair with SWOT, like any tool, SWOT has both strengths and weaknesses. Because of this, another decision model is needed to complement SWOT by picking up where it leaves off. The Eisenhower Matrix is the perfect fit as it is a prioritization tool that strengthens the strategy development process. After SWOT identifies key factors, the Eisenhower Matrix prioritizes based on urgency and importance, an essential step, as the saying goes, if everything is important, nothing is important.
However, like SWOT, the Eisenhower Matrix can oversimplify complex issues or cause leaders to overlook long-term concerns that do not feel urgent at the moment. Therefore, while it adds value, it, like SWOT, needs to be used thoughtfully and intentionally.
Other decision models considered
When considering other decision models, it was on the guidance from Gamble et al. (2021) who suggested SWOT as the main model and complemented by other tools. I was intentional in keeping the Eisenhower Matrix paired with SWOT because I intended to build a full spectrum model where they work in tandem. Since SWOT functions as a diagnostic tool, and the Eisenhower Matrix serves as a prioritization basis I focused on what else was needed to round out the process. My favorite Model is the OODA loop, Observe, Orient, Decide, Act which emphasizes constant reassessment. I stated earlier, if everything is a priority, then nothing is a priority. Because decisions are only valid at the moment they are made, I decided that the Pareto Principle (80/20 Rule) would help complete it. As Krogerus and Tschäppeler (2017) explain, it focuses 80% of its efforts on 20% of the critical tasks. Once those top priorities are completed or placed on sustainable footing, new priorities can take their place as the cycle continues. This enables the organization to focus its priorities and efforts on where they matter most.
The next decision model that complements the SWOT analysis, the Eisenhower Matrix, and the Pareto Principle (80/20 Rule) is the Cognitive Dissonance Model because it addresses the psychological framework of the decision maker. Regardless of how effective these tools are independently or in tandem. They are ultimately just processes that provide organized data. Where the difference comes in and where the true impact lies is how the leader takes the information, internalizes it, and responds to that information. A leader should have Emotional Intelligence to understand that there is no such thing as good news or bad news, good data or bad data; there is just data. It is how the leader takes that information that makes the difference.
As Krogerus and Tschäppeler (2017) argue, cognitive dissonance exposes gaps between what organizations claim to value and how they actually operate. Cognition encompasses knowledge, opinions, beliefs, attitudes, and perceptions. Dissonance arises when two or more cognitions are in conflict. The question then becomes: Can a leader handle new information that conflicts with their long-held beliefs? Most individuals experience a certain level of cognitive dissonance, but where it becomes an issue or non-issue revolves around the individual’s ability to rationalize or justify the conflict. When a leader is unable or unwilling to confront this dissonance, it opens the door to the sunk cost fallacy, where past investments are used to justify and validate poor ongoing decisions rather than accepting the information and making the necessary changes.
Conclusion
This paper has shown that while each evaluation and decision-making model provides valuable individual insights on its own, it is in their combined and systematically blended application that they deliver the most valuable foundation for informed, adaptable, strategic, and most importantly, actionable decisions that drive long-term success.
When leaders evaluate their company’s internal environment and long-term success, it should never do so in isolation. Frameworks like VRIN/VRIO analysis and the value chain help identify core strengths, while broader models like dynamic capabilities reveal how well a company can respond to various changes. Decision tools like SWOT, the Eisenhower Matrix, and the Pareto Principle all contribute, yet it is important to understand that the impact of the tools is only dependent on the wisdom and decisions of the person wielding them.
Ignoring the psychological aspect of the decision-making process can render all of the tools ineffective. The Cognitive Dissonance Model, for instance, could be considered the most important part of the analysis and decision-making process. When a leader clings to outdated assumptions or is resistant to necessary changes, everything else falls apart.
