INTERNAL AND EXTERNAL FACTORS OF A COMPANY - JOB - 2025

The internal and external factors of a company are those agents that are inside and outside an organization, which can generate a positive or negative impact on it. A business concept that looks perfect on paper can be flawed in the real world.

Sometimes the failure is due to the internal environment - company finances, personnel, or machinery. Other times it is due to the environment that surrounds the company. Knowing how internal and external factors affect a business can help the business prosper.

Knowing the internal and external factors that affect an organization gives the company the intelligence it needs to be able to solve its priorities efficiently, as well as to make strategic plans that are useful and convenient that can be applied in the future.

Ranking the factors, according to the severity with which each of these will affect the organization and their probability of occurrence, can help to discern which factors require immediate attention and which can be put aside for a time.

Regularly reviewing the factors that affect the business is the best way to protect yourself against a catastrophe. A formal review of internal factors will help you better understand certain trends and subtle issues that need to be addressed.

Publications, blogs and newsletters are some of the resources that can help you stay informed about the external factors that affect your business.

The review of this information will help to be aware of the critical factors and thus guarantee the priorities for eventual adjustments in the business plans as necessary.

Internal factors

They refer to all things that are within the company and under its control, regardless of whether they are tangible or intangible.

These factors are grouped into strengths and weaknesses. If an element brings positive effects to the company, it is considered as strength. If a factor prevents the development of the company, it is a weakness.

Internal factors determine how the organization progresses, both as an autonomous organizational entity and in response to its external environment.

Owners

It is the group of people who have invested in the company and have property rights over the organization. They have the right to change company policies at any time.

Mission

Why does an organization exist? What's its purpose? Answering these fundamental questions describes the mission of an organization. A successful organization has a clear sense of its ultimate purpose and knows how to fulfill that purpose.

Board of Directors

It is the governing body of the company chosen by the shareholders, assigned the responsibility of supervising the main managers of a company, such as the general manager.

Great leaders inspire and direct. Often the most persuasive way to do this is by example.

Communication

Successful organizations thrive on effective communication practices, where teams and their leaders communicate freely and often to improve results.

Organizations with communication deficiencies often have rigid leadership structures that destroy trust.

Organizational structure

At some point, most organizations had highly hierarchical structures, with many levels of management defining the organization from top to bottom.

More recently it has been understood that organizations with flat structures (with few hierarchical levels) outperform those with highly hierarchical structures.

Learning

Learning is one of the most fundamental human activities and influences, directly or indirectly, the success of any company.

Today's most successful organizations, like Google, Apple, and Amazon, are essentially learning organizations.

Personal

The employees and also the unions they join are very important. If managed correctly, they can positively change the policy of the organization. However, poor staff management could lead to a catastrophic situation for the company.

The staff must be good at their job. Managers must be good at managing their junior staff. However, even if everyone is capable and talented, internal politics and conflict can ruin a good company.

Capital resources

Money is vital for every company to carry out its plan. No company can survive without capital resources. After a company has a sufficient budget, it can easily execute its projects and grow.

Even in a buoyant economy, lack of money can determine whether a business survives or dies. If you have enough capital, you have much more flexibility to expand your business or to withstand an economic downturn.

Organizational culture

It is the collective behavior of the members of an organization and the values, visions, beliefs, attitudes, priorities and habits on which their actions are based.

It plays an important role in shaping business success, because it is critical to how well the organization will perform.

Every organization has its own culture. Almost everything that affects your ability to compete and respond successfully to changes in the external environment, as well as your own success or failure, is a consequence of that culture.

External factors

They are the elements of the external environment. The company has no control over how they will be formed. They represent opportunities or threats to the company.

The external environment can be subdivided into two layers:

- Task environment.

- General environment.

Task environment

It consists of factors that affect and are directly affected by the operations of the organization.

A manager can identify these factors as of specific concern, rather than having to deal with the more abstract dimensions of the general environment:

Competitors

The policies of a company are often influenced by competitors. Companies always try to stay in the competitive market and go further than their competitors. In today's world economy, competition and competitors have increased tremendously in all respects.

The positive effect of this is that customers always have options and the overall quality of the products increases.

Competition can bankrupt a company: just look at how many bookstores went down and closed competing with Amazon.

customers

Customer satisfaction is the main objective of any company. The customer is the one who pays the money for the products or services of an organization. They are the ones who provide the benefits that companies are looking for.

Managers must pay close attention to customers, because the purchase they make is what keeps a company alive and strong.

The power of customers will depend on the aggressiveness of the competition for their money, the quality of the company's products and the advertising that makes customers want to buy products or services from that company, among other elements.

Providers

They are those who supply the materials or services to a company. Engaging with suppliers is an important managerial task.

A good relationship between the company and the suppliers is essential to be able to keep a good follow-up on the quality and cost of the materials purchased.

General environment

It is made up of factors that can have an immediate direct effect on the operations of the company but do not, however, influence its activities. The dimensions of the general environment are broad and not specific:

Economic dimension

The most important economic factors for the company are inflation, interest rates and unemployment.

These economic factors always affect the demand for products. During inflation, the company has to pay more for its resources and has to cover higher costs by increasing product prices.

When interest rates are high, customers are less willing to borrow money, and the business itself must pay more when it borrows.

When unemployment is high, the company can be very selective about who it hires, but the purchasing power of consumers is low, because there are fewer people working.

Technological dimension

It refers to the methods available to convert resources into products or services. Managers must be careful with the technological dimension; the investment decision must be precise in the new technologies and must adapt to them.

Socio-cultural dimension

They are the customs, values ​​and demographic characteristics of the society in which the company operates. It must be well studied by a manager.

Indicates the product, services, and standards of conduct that society is likely to value and appreciate. The standard of business conduct varies from culture to culture and so does the taste and need for products and services.

Political-legal dimension

It refers to commercial laws, the relationship between the government and companies and the general political-legal situation of a country. Commercial laws establish the obligations and duties of a company.

A good relationship between government and business is essential for the economy and, most importantly, for business. The general situation of law and justice implementation in a country indicates whether there is a favorable situation for business.

International dimension

It refers to the degree to which a company is involved or affected by business in other countries.

The concept of global society has brought together all nations, and with the modern communication and transportation technology network, almost all parts of the world are connected.

References

1. Fraser Sherman (2018). What Are Internal & External Environmental Factors That Affect Business? Small Business - Chron.com. Taken from: smallbusiness.chron.com.
2. Patrick Gleeson. Internal & External Factors That Affect an Organization. Small Business - Chron.com. Taken from: smallbusiness.chron.com.
3. Marilyn Lindblad (2018). Internal & External Factors That Affect an Organization. Azcentral. Taken from: yourbusiness.azcentral.com.
4. Iedunote (2017). Internal and External Environment Factors that Influences Organizational Decision Making. Taken from: iedunote.com.
5. Mageplaza (2018). What Are Internal & External Environmental Factors That Affect Business. Taken from: mageplaza.com.