Internal Audit of Fuller Smith & Turner plc Essay

Internal Audit of Fuller Smith & Turner plc - Essay Example The aim of the audit is to see the need for corrective action by top-level management on its policies. The idea is to stimulate mutual discussion between outside auditors and insiders (management and employees) who implement goals and find ways of improving the present situation. Its objective is therefore not only to correct the present way things are done, but probably more important is the good that the process can do to everyone involved, like the conduct of surveys of the present situation and the roundtable discussions that would be based on facts instead of opinions (Kondo, 1988, p. 15-16). An internal audit serves an educational purpose and offers management a chance to review those facts of the firm's strategies and operations that may reflect on management, employees, and other stakeholders. One positive effect of an audit is contributing to the way employees improve relationships with each other and understanding the work they do. There are different ways of doing an internal audit. ... The simplest is to gather data from periodic strategic and operational reviews, but the firm can also commission the use of other tools such as employee and customer satisfaction surveys, performance excellence models, and benchmarking (Witcher, 2003). Three highly popular techniques we can use audit the firm and the business environment where it operates are the SWOT analysis (Andrews, 1987; Ansoff, 1965; Chandler, 1962), the PESTEL analysis (Steiner, 1979; Andrews, 1987), and Porter's Five Forces model and Generic Strategy (Porter, 1980 and 1985). SWOT/PESTEL Analysis For this first part, we combine the SWOT/PESTEL approach. The SWOT analysis is so-called because of the acronym of the four factors required for assessing the organization's internal (Strengths and Weaknesses) and external (Opportunities and Threats) environments. The PESTEL analysis considers six environmental factors that affect the enterprise and its business: Political, Economic, Social, Technological, Environmental, and Legal. We will combine the PESTEL factors with the SWOT analysis factors to audit Fuller's. Porter's Models Porter (1980, 1985) proposed the Five Forces model that helps a firm analyse its environment and design its competitive strategy by choosing one of three generic strategies. The five forces are bargaining power of suppliers, bargaining power of buyers, threat of substitutes, the intensity of rivalry, and the threat of new entrants. The three generic strategies are over-all cost leadership that allow the firm to compete on the basis of price by achieving efficiencies by minimising costs and attaining economies of scale; differentiation by way of brand image, technology, features, uniqueness, or the quality of service support, any of which enables the firm to charge a