What Is Internal Business Analysis?

An internal business analysis is a business analysis conducted by management — or by consultants they hire — to evaluate its strengths and weaknesses. Such analyses are often closely associated with so-called "SWOT" analysis, which stands for "strengths, weaknesses, opportunities, and threats." An internal business analysis is generally more concerned with the strengths and weaknesses of a business, while its opportunities and vulnerabilities fall more under the auspices of an external business analysis. When studying strengths and weakness, it is important to analyze them in light of their impact on customers, since the customer’s view of the company is ultimately the one that matters most.

It is crucial for companies to periodically step back and examine their strengths and weaknesses in order to stay relevant and competitive. Failure to do so can lead to stagnation, which in turn can lead to competitors from the market getting the upper hand. One of the best methods of preventing this stagnation is an internal business analysis, in which a company takes a detailed look at the ins and outs of its own business; this helps them to see what is working and what needs improvement.

When a company undertakes an internal business analysis, project managers should make sure that they are providing an honest assessment. It would do no good for a company to analyze itself with anything but the utmost candor. For this reason, it is sometimes wise for a company to seek an independent third party to assist in the review, assuring impartiality.

A company that can focus on its strengths often does well in the business world, so identifying these strengths is one of the main objectives of an internal business analysis. Companies may be able to capitalize on certain resources or capabilities that separate it from the rest of its industry competition. These analyses can highlight the most successful departments and initiatives within a company, too, which can help managers determine ways to duplicate those successes.

Just as important as identifying strengths, spotting weaknesses should be a key imperative in any good internal business analysis. By exposing weaknesses, a company’s hierarchy can come up with ways to eliminate those problems. An analysis should always focus on how customers view a company, since customers may be able to see problems that the company can’t spot on its own. Although it may be difficult for a company to admit to its shortcomings, it is the only way that these weaknesses can be rectified.