Discuss The Internal Environment Commerce Essay


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The internal environment assessment and analysis is conducted after the external environment analysis. While the external environment analysis seeks to identify opportunities and threats in the external environment, the internal environment analysis seeks to identify the strengths and weakness of business. It focuses on factors that are internal of the business, some of which can be easily changed or improved upon. The three models are resources, capabilities and core competences which Influence when identifying internal factors of the business.

It is important to distinguish between the resources and the capabilities of the firm, resources are the productive assets owned by the firm; capabilities are what the firm can do. According to (Ivythesis, 2010), the connection between the resource and capabilities of a firm in the area of business makes a competitive advantage. It is because the capabilities and resources allow the organization to create value and gain some form of advantage from the rivals.

1.1 Resources

To take a wider view of a firm's resources it is helpful to identify tow principal types of resource: tangible and intangible

1.1.1 Tangible Resources

Tangible resources are the easiest to identify and evaluate: financial resources, human resources, physical resources and organizational.

Tangible Resources


The physical resources of McDonalds include the restaurant location which will be at UCTI building with an average sitting capacity of 50 persons. The restaurant is equipped with the latest cooking and storing equipment. The restaurant has the facility of Play Place for students and has one television.

Human resource

Human resource is most important resource of any business unit wherever in the world. The strength of any organization is not the machine, equipment or its cash flows; rather these are employees that make an organization great and competitive.

McDonald's recognizes that employee satisfaction is a critical component in its goal of achieving 100 percent customer satisfaction. Its employees are offered world-class, award-winning training and the opportunity for career development.

Hiring Personnel

There is no criterion as such for the selection of employees, what is important is integrity, motivation and some educational qualifications.

In the workforce, qualities, which are sought, are anatomy, motivation and ability to work more hours. While for manager the characteristics required are leadership, energy and attraction


McDonald's is concerned, now information is available about its financing activities. McDonald's is working with two banks namely CIMB and MayBank. These two banks are taking care of any financial activity for McDonald's inside and outside the country and also provide short-term loans to the company.


McDonald serve as training center where day-to-day coaching and shoulder-to-shoulder interaction between managers and crew are emphasized. Training begins with one-on-one instruction before a crew-person cooks the first French fries and for new entrants to the workforce, the company offers an important foundation:

Teaching interpersonal and organization skills.

Crew-members can also learn the importance of teamwork.

Discipline and responsibility.

1.1.2 Intangible resources

1.2 Capabilities

McDonald applied an essential step in translating directions and operating practices into capabilities. The successful firms used the knowledge as part of the fundamental transformation in their enterprises. Moreover, the McDonald pioneered the transformation through systematization which is appropriate in their processes.

The idea of systematization presumes that the firm can more fully articulate the processes as part of its capabilities.

With concern of knowledge management, McDonald Company is primarily implementing the McDonald's system. The essence of systematization of knowledge is followed by every outlet with a detailed set of rules. Therefore, the operating practices became part of every employee and given a thorough attention from the management through the training programs.

Capabilities are highly essential in the following areas:


Inbound Logistics

Organizing the supply of food and materials to restaurants through approved third party logistics operators.

Production huge plants denoted exclusive to McDonald control food


R&D in field research needs of end users.

Quality development in collaboration with good suppliers

Forward integration through franchisees with control over store presentation, menu items etc. and enhance participation in process improvement.

Outbound Logistics

It is the concern of the franchisee.

Outbound logistics are growing as a part of McDonald recycling system integrating in the logistics of distribution center.

Sales & Marketing

Long term marketing objectives are broken down into short term measurable targets, which McDonalds uses as milestones.

Country teams are given autonomy in marketing mix decision.


Services provided by the companies enrollment standards

Core competencies

Core competencies are all about providing increase customer value. This numerous opportunity to the company; it can be about innovative new products or exploring the new market niche.

Same is the case with MacDonald selling burger is not their core competence instead providing convenience and customer oriented policy is their strongest point.

Following are the McDonald's core competencies which makes it stand ahead among its competitors in industry:

McDonald's play area: McDonald's introduced the play area of students, like playing chess titans till.

Product variety: McDonald's keeps on changing a bringing innovation in to burger, salads, desserts, drinks and sandwiches variety.

For growth McDonald's have to experiment with new product line. It is suggested that McDonald's should rely on test marketing to check new menu if it wants to maintain a constant growth.

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