Unit 3 - Internal Environment

Learning Objective

The objective of this unit is to analyse an SME's strengths and weaknesses and areas of specialization. Financial, strategic and operational factors and resources are considered and cost is calculated. The opportunities open to the SME are diagnosed and their growth potential assessed. The critical information - business structure and operations, company history, major products and services, key skills, knowledge and abilities and executive biographies are addressed. The suitability of an SME's strategy is examined and is benchmarked against competitors. Finally a very short overview of motivation and leadership strategies is given.

Estimated Time

It should take you around 120 minutes to complete this unit.


It is important that you not only know the internal environment of your company extremely well, but that you are also able to analyse the business processes and the organizational and hierarchical structure of your company, as analysis is the first step towards improvement. Break-even analysis and cost-benefit analysis are techniques that focus on your company, your suppliers and your customers, while benchmarking and SWOT analysis techniques give you insight into your competitors. An early warning system that can help you identify weaknesses in your company is the so called balanced scorecard. This system operates through observing key figures. Another integral part of a company is management. A company depends mainly on its staff and most importantly on its management and its leadership style.