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What is the distinction between external analysis and internal analysis?
- a)External analysis is conducted by executives and employees of the enterprise.
- b)External analysis is based on published financial statements.
- c)Internal analysis is conducted by investors and credit agencies.
- d)Internal analysis is made by those who do not have access to the detailed records of the company.
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
What is the distinction between external analysis and internal analysi...
The distinction between external analysis and internal analysis lies in the focus and sources of information used in each type of analysis.
External Analysis:
External analysis refers to the examination and evaluation of factors outside the company that may impact its performance and success. It involves studying the external environment in which the company operates, including the industry, market, competitors, customers, and other macroeconomic factors. The purpose of external analysis is to identify opportunities and threats that may influence the company's strategic decisions.
Key Points:
- Conducted by executives and employees of the enterprise.
- Based on published financial statements.
- Focuses on factors outside the company.
- Examines the industry, market, competitors, customers, and macroeconomic factors.
- Identifies opportunities and threats.
Internal Analysis:
Internal analysis, on the other hand, focuses on evaluating the internal resources, capabilities, and competencies of the company. It involves assessing the company's strengths and weaknesses to gain insights into its core competencies, competitive advantage, and areas for improvement. Internal analysis typically examines various aspects of the company, such as its financial performance, operations, human resources, marketing, and technology.
Key Points:
- Conducted by investors and credit agencies.
- Made by those who do not have access to the detailed records of the company.
- Focuses on internal resources, capabilities, and competencies.
- Assesses the company's strengths and weaknesses.
- Evaluates financial performance, operations, human resources, marketing, and technology.
Conclusion:
In summary, external analysis focuses on factors outside the company, such as the industry, market, competitors, and macroeconomic environment, to identify opportunities and threats. Internal analysis, on the other hand, evaluates the company's internal resources, capabilities, and competencies, along with its strengths and weaknesses, to gain insights into its performance and strategic direction. Both types of analysis are essential for understanding the company's position and making informed decisions.
External Analysis:
External analysis refers to the examination and evaluation of factors outside the company that may impact its performance and success. It involves studying the external environment in which the company operates, including the industry, market, competitors, customers, and other macroeconomic factors. The purpose of external analysis is to identify opportunities and threats that may influence the company's strategic decisions.
Key Points:
- Conducted by executives and employees of the enterprise.
- Based on published financial statements.
- Focuses on factors outside the company.
- Examines the industry, market, competitors, customers, and macroeconomic factors.
- Identifies opportunities and threats.
Internal Analysis:
Internal analysis, on the other hand, focuses on evaluating the internal resources, capabilities, and competencies of the company. It involves assessing the company's strengths and weaknesses to gain insights into its core competencies, competitive advantage, and areas for improvement. Internal analysis typically examines various aspects of the company, such as its financial performance, operations, human resources, marketing, and technology.
Key Points:
- Conducted by investors and credit agencies.
- Made by those who do not have access to the detailed records of the company.
- Focuses on internal resources, capabilities, and competencies.
- Assesses the company's strengths and weaknesses.
- Evaluates financial performance, operations, human resources, marketing, and technology.
Conclusion:
In summary, external analysis focuses on factors outside the company, such as the industry, market, competitors, and macroeconomic environment, to identify opportunities and threats. Internal analysis, on the other hand, evaluates the company's internal resources, capabilities, and competencies, along with its strengths and weaknesses, to gain insights into its performance and strategic direction. Both types of analysis are essential for understanding the company's position and making informed decisions.
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Community Answer
What is the distinction between external analysis and internal analysi...
The distinction between external analysis and internal analysis lies in the access to detailed records of the company. External analysis is conducted by individuals who do not have access to the detailed records and primarily rely on published financial statements. On the other hand, internal analysis is conducted by individuals who have access to the books of accounts and all other information related to the business.
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What is the distinction between external analysis and internal analysis?a)External analysis is conducted by executives and employees of the enterprise.b)External analysis is based on published financial statements.c)Internal analysis is conducted by investors and credit agencies.d)Internal analysis is made by those who do not have access to the detailed records of the company.Correct answer is option 'B'. Can you explain this answer?
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