CHAPTER IV: INTERNAL ANALYSIS Internal Assessment focuses on identifying and evaluating a firms strengths and weaknesses in the

functional areas of business. The execution of internal audit is somehow having similarities in performing external assessment. The key persons of the different department are concerned in assessing the organizations strengths and weaknesses. It includes the management, marketing, finance/accounting, production/operations, research and development, and

management information systems. The interdependence and/or relationship among these areas of business are examined. Strategic implications of important functional area concepts are examined. The process of performing an internal audit is described.

The significance of having an internal audit is (1) to know the current status of the firm and (2) to generate a future plan for the companys growth and development.

A. MANAGEMENT

Management is defined as an organizational activities which an act of coordinating the efforts of people to accomplish desired goals and objectives using available resources efficiently and effectively.i The basic function of a management must focus on: planning, organizing, motivating, staffing, and controlling.ii

Dragon Estate Development Corporation is a licensed real estate broker; they are responsible in promoting the real estate properties from the developer to its final consumers.

Planning Dragon Estates plans to expand their company and to enter to the global trading industry for the next 20 years. They are also pursuing to be included in the top 1,000 leading licensed broker in the Philippines.

These planning remains dangling and vague for the whole company, because as of now; they dont have any blueprint on how to attain these goals for the near future.

Organizing

Organizing the management of an organization requires the hierarchical order of people. Knowing the people who are responsible to a particular task and naming the person that are accountable in reporting to whom. Meaning to say, organizing is just a forming of organizational structure or organizational chart in a simple word.

This is one edge of Dragon Estate among any other real estate licensed broker. Dragon Estate composes of 13 organic employees. This attribute will help them to disseminate information and messages among other people within the organization. And the company has established a good framework of an organizational structure.

Motivating

Motivating can be defined as the process of influencing people to accomplish specific objectives. This may include: efforts directed toward shaping human behavior. Specific topics include leadership, communication, work groups, behavior modification, and delegation of

authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial moraleiii

There are several ways or systems that the company is using enable for them to motivate their employees (both organic and inorganic employee).

Transparency of the company towards the inorganic employees Trainings and seminars that has been conducting in a period of interval Incentives for the organic employee Reward systems toward employees.

Since the company has a small organizational structure, hence the dissemination of message and information is faster. This will help the employees to perform and make a decision in an immediate manner.

Staffing

The company itself did not invest any amount for their internal human resource management department. Despite of this, the company was able to manage the people through the help of their organic employees and their regional supervisors. With regards to the compensation of their organic employee, the President herself is the one who manages the salaries and wages, even the other compensation and benefits of her organic employee.

Controlling

This is one of the managerial functions. It is an important function that aims to help in checking the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in a desired manner.

B. MARKETING

Although, Dragon Estate is a marketing arm of Moldex, Dragon Estate has not conducted any strategic planning or any marketing plan yet. The company was just relying on the selling ability and skills of their non-organic employees. They just provide the sales agents selling kit and conducting a seminar in every newly recruited non-organic employee or sales agents in an interval manner.

Customer Analysis The customers profile are being analyzed by the marketing department very well, but the problem is that the process stops on after analyzing the customers information/data, even though there are strategic planning, the another problem is that the plan is not clearly stated and not formally written and communicated to different department.

Selling Products/Services

Product selling of the company is usually done through personal selling with the help of sales agents or the accredited non-organic employees. There is a so-called after sales services which the company are now focusing. In serving their previous customer with regard to some issues that are suddenly exists, this includes even the legal matter.

Product and Service Planning, Pricing and Distribution

Since the Dragon Estate Development Corp. is just a marketing arm (BPO) of moldex and other developers, they are not authorized to set a specification on product planning, pricing and distribution. The company is dependent on the standards given by the developer.

C. FINANCE/ACCOUNTING One of the most important factors in evaluating the companys internal assessment is through its financial performance. This will show if the companys financial performance is sustainable, as well this will be an analysis if the current companys strategies are effective or profitable. In the case of Dragon Estate we will use its previous financial statement from the year 2010 to 2012 to evaluate its financial performance that will also help us in establishing a short-term and longterm forecasting for our strategic plan for the company.

D. PRODUCTION/OPERATION

Since Dragon Estate is a real estate broker, its developers are the one which is concern about the production of the projects that they have to promote or to sell. Dragon Estate have different developers including Moldex Realty Marketing Inc., Ayala with its projects Amaia and Avida, Stateland and New Apec. Dragon Estate will depend on the production of the projects that its developers want to promote and offer to its target customers.

E. RESEARCH AND DEVELOPMENT F. MANAGEMENT INFORMATION SYSTEM

G. DAVIDs FUNCTIONAL AUDIT

Management Audit 1. Does the firm use strategic-management concepts? 2. Are company objectives and goals measurable and well communicated? 3. Do managers at all hierarchical levels plan effectively? 4. Do managers delegate authority well? 5. Is the organizations structure appropriate? 6. Are job descriptions and job specifications clear? 7. Is employee morale high? 8. Are employee turnover and absenteeism low? 9. Are organizational reward and control mechanisms effective? Marketing Audit 1. Are markets segmented effectively? 2. Is the organization positioned well among competitors? 3. Has the firms market share been increasing? 4. Are present channels of distribution reliable and cost effective? 5. Does the firm have an effective sales organization? 6. Does the firm conduct market research? 7. Are product quality and customer service good? 8. Are the firms products and services priced appropriately? 9. Does the firm have an effective promotion, advertising, and publicity strategy? 10. Are marketing, planning, and budgeting effective? 11. Do the firms marketing managers have adequate experience and training? 12. Is the firms Internet presence excellent as compared to rivals? Finance/Accounting Audit 1. Where is the firm financially strong and weak as indicated by financial ratio analyses? 2. Can the firm raise needed short-term capital? 3. Can the firm raise needed long-term capital through debt and/or equity?

Y/N N N Y N/A Y N/A N/A N/A N/A

Y N/A N/A Y N/A N/A Y N/A N/A N/A Y

4. Does the firm have sufficient working capital? 5. Are capital budgeting procedures effective? 6. Are dividend payout policies reasonable? 7. Does the firm have good relations with its investors and stockholders? 8. Are the firms financial managers experienced and well trained? 9. Is the firms debt situation excellent? Production/Operations Audit 1. Are supplies of raw materials, parts, and subassemblies reliable and reasonable? 2. Are facilities, equipment, machinery, and offices in good condition? 3. Are inventory-control policies and procedures effective? 4. Are quality-control policies and procedures effective? H. CURRENT AND PREVIOUS STRATEGIES USED BY THE COMPANY

N/A N/A N/A N/A N/A N/A

I. SUMMARY AND CONCLUSION A. Summary of the key internal factor

STRENGTH

1. 100% after sales accommodation 2. Inter-organizational relationships with other brokers 3. Strong relationship with its developers 4. No. 1 real estate licensed broker of MRMI for the past 2 decades 5. Fast information dissemination 6. Numerous inorganic employees 7. Receiving payments from customers

WEAKNESS

1. Lack of focus in marketing numerous projects from different developers 2. Lack of organic employees to support the management operation 3. Low advertising campaigns to promote projects 4. Human resource investments arent concern.

B. EXTERNAL FACTOR EVALUATION MATRIX

KEY EXTERNAL FACTOR STRENGTH 1. 100% after sales accommodation 2. Inter-organizational relationships with other brokers 3. Strong relationship with its developers 4. No. 1 real estate licensed broker of MRMI for the past 2 decades 5. Fast information dissemination 6. Numerous inorganic employees 7. Receiving payments from customers WEAKNESS 1. Lack of focus in marketing numerous projects from different developers 2. Lack of organic employees to support the management operation 3. Low advertising campaigns to promote projects 4. Human resource investments arent concern.

Weight

Rating

Weighted Score 0.4 0.8 0.4 0.4 0.15 0.21 0.21 0 0.07 0.16 0.16 0.16 3.12

0.1 0.2 0.1 0.1 0.05 0.07 0.07 0.07 0.08 0.08 0.08 1

4 4 4 4 3 3 3 1 2 2 2

Weight ranges from 0.0 (not important) to 1.0 (all-important) rating: 4= major strength 3=minor strength 2=minor weakness 1=major weakness

www.http://quickmba.com/Management Strategic management: concepts and cases / Fred R. David.13th ed. Strategic management: concepts and cases / Fred R. David. 13th ed.

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