Internal control is one of the most importance factors of any business. It decided the strategy, the performance and outcome of successful business. An article by Tom Connor, “Internal Resource Audit for Strategists- A proposal”, has proved the importance of internal control.
This article’s purpose is aimed to internal resource audit that “make a conceptual contribution to the art and practice of management” and “offer some criticism of current theory from a management perspective.”
Internal resource audit (IRA), according to Connor, is “a basic step, a strategic option, a key part of the platform for decision” of a business. Main objectives of IRA are basically based on five key questions:
1. “Is the firm in a fit condition for the strategic task facing it?”
2. “Is the firm alert to change signals in the broad environment?”
3. “Has the firm the durability to last the course over time?”
4. “Is the firm innovative in its pursuit of its strategic directions and methods?”
5. “Has the firm the capacity and disposition to adapt to change in environmental forces?”
Objectives of these questions are to help managers keep track on resources audit as well as development. Accompanied with these five questions are five principles in which managers must consider to get strategic goals. The first principle is fitness in which proves the “ability of a firm to maintain and win business in its served markets.” There are two factors affecting this principle, including possession of tangible/intangible assets, organizational structures and policies. The next principle is information system, called “alertness”. Successful managers must create a controllable internal system that employees could access both internal and external sources to improve the firm’s performance. The third question is explained by the “principle of durability” that focuses on firm’s strength as well as concentration through ability to renew, improve, and develop “key assets and resources.” The next principle is “innovation” of “human capital” by a flow of intelligent, talented management, “reward system” in employee performance measurement. The last “principle of adaptability” is the combination of “appropriate information processing and propensity within the firm to accept and embrace changed condition. Performance control feedback system is also a strategic success factor measurement in both quantitative and qualitative.”
About the literature of resources, McKieman has pointed out four approaches, according to Connor. First, “planning and practice” focus on gathering information, planning, and forecasting. Second, “learning” is subjected to adjustment and changing in organizational system, including expectation, behavior, and value. Third, “positioning” is clarified through the knowledge of market structure and have different strategic positions. Finally, the “development, acquisition, and deployment over time of scare resources and skills” are called “Resource-based-view (RBV).”
In conclusion, a successful business needs good internal control resource. It reduces the risk, increases the performance and quality of a firm. A good manager needs to consider all of those factors that affect internal control and have better strategies to apply and combine them perfectly to increase the firm’s competitiveness.
Citation: Connor, T. (2011). Internal Resource Audit for Strategists—A Proposal. I-Business, 3(3), 287-294. doi:10.4236/ib.2011.33038Internal Resource Audit
I agree with your conclusion of this article. It is very important for businesses to control internally so that they know what is going on.
ReplyDeleteThis article sounds like a "status quo manager's" nightmare. Following these procedures would result in an ever evolving and adapting company. This is what is necessary to stay competitive.
ReplyDelete