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An internal analysis is the company’s self-evaluation of aspects of its own company. It evaluates the traits and functions, strengths, and weaknesses within the organization. While performing an internal analysis, companies typically analyze strengths and weaknesses. Internal analysis’ often includes the cost of business. A SWOT analysis is a good tool to use for internal analysis. 

The external analysis evaluates the external factors of a company. When doing an external analysis, we have to look at outside variables that we usually do not have control over such as material cost or competitors vying for our customers. Internal and external analysis is important in strategic planning because you have to know your strengths and weaknesses and be able to plan and adapt to outside variables.  When evaluating a company’s external analysis, a PESTLE will give a good in-depth look at external forces affecting the company. PESTLE analysis evaluates Political, Economic, Social, Technological, Legal, and Environmental examination.

 These are all important evaluations to develop strategies and goals to keep the company competitive and on top in this ever-changing world. The results of these plans will tell you where your strengths are and where you can trim-the-fat. It will tell you what external forces could potentially put you out of business, and analysis allows you to plan accordingly. 


Internal and external evaluation typically assist in appraising the factors that affect the business. An internal analysis evaluates the internal business’s factors that impact its operation, while an external analysis looks at the broader business environment that influences its operation. Organizations usually analyze their strengths and weaknesses as part of their internal analysis (Palepu et al., 2020). An evaluation of strengths enables the organizations to have an insight into their capabilities that would make them compete with their rivals and remain sustainable in the competitive business environment. Also, analysis of weaknesses helps the companies understand their drawbacks and areas in which they are not well-performing to enable them to make adjustments that would consequently enhance their performance in the market.

In addition, organizations usually analyze opportunities and threats as part of their external analysis. Evaluation of the opportunities helps inform the companies on the prospects that they can grab and implement to foster their performance and productivity in the market (Palepu et al., 2020). An evaluation of threats informs the organization on the factors which are likely to affect their performance adversely. Some of the threats often include competition and new entrants.


Review the Strategic Management Project Background document.

Review the following terms and concepts discussed this week to prepare for this assignment:

  • organizational structure
  • organizational culture
  • inertia
  • Holacracy
  • PESTEL model

Create a Word doc and title it Strategic Management Research Journal Part 3. (Again, be sure to download and follow the template that I provided for you in your welcome message. Use a Title page and a References page with at least three references. No running head is required, but do use headings to separate portions of your paper, and remember to cite your sources in the main body of your paper).

Write a 525- to 700-word response to the following prompts in your journal entry:

  1. Assess whether Caterpillar Inc. is using the appropriate measures to verify its strategic effectiveness. 
  2. Summarize Caterpillar Inc.’s organizational structure.
  3. Determine whether Caterpillar Inc.’s organizational structure is considered a traditional organizational structure or a Holacracy (be sure to define Holacracy and why/why not it applies).. 
  4. Justify why it’s important for Caterpillar Inc.’s leadership team to study and understand the company’s internal and external environments.
  5. Evaluate Caterpillar Inc.’s competitive position and how they have responded to shifts in the external and internal environments.
  6. Recommend strategies in operational changes to support Caterpillar’s strategic plan, future business decisions, and improvement in business performance.