Final answer:
Green Frog is performing an internal analysis to understand which resources and capabilities can be sources of competitive advantage, focusing on internal company factors.
Step-by-step explanation:
When Green Frog, an environmentally friendly firm in the cosmetics industry, is assessing which of its resources and capabilities could provide a competitive advantage, it is performing an internal analysis. An internal analysis focuses on examining the internal factors of a company such as its strengths, weaknesses, resources, and capabilities to determine how they can contribute to the firm's competitive positioning. This is distinct from an external analysis, which would study factors outside of the company like market trends, competition, and economic environment.
Marginal analysis, as noted in the reference information, is a method used to understand the benefits of environmental cleanup in comparison to its costs. It reflects efficiency in the allocation of resources when the marginal costs exceed the marginal benefits. However, marginal analysis itself is not directly relevant to an internal analysis of a firm's competitive advantages.