Question

Why should we care about internal analysis?

A. External analysis is often incomplete

B. Factors outside a company don’t really affect the company

C. Some research suggests internal factors explain more of the variance in company profitability than external factors

D. External analysis is often incomplete and Factors outside a company don’t really affect the company

E. External analysis is often incomplete and Some research suggests internal factors explain more of the variance in company profitability than external factors

Answer 1

Option A

• Internal analysis is concerned with the internal factors of a business and its environment.
• It analyses the strengths and weaknesses of an organisation that are internal to it.
• While an external analysis is concerned with those factors that affect an organisation and business externally.
• These factors include various economic, legal , technological, competition aspects of an organisation.
• This external analysis does not focus on the strengths and weaknesses of an organisation present internally.
• Hence it is often incomplete, which is why we need to care about internal analysis.