Internal And External Factors That Affect The Business Environment

It is of great importance to make an analysis of the environment in which an organisation operates in order to develop and implement a suitable, successful strategy for the company. According to Johnson, Scholes and Whittington (2008) the business environment of a company is an important issue determining its survival and success. There are several layers of this business environment – the macro environment, the industry or sector layer, the layer with competitors and markets.

This macro approach simply based on Economic, legal and political environment will may affect the business. Economic environment refers to the external factor in a business that can influence a business. Socialism and communism economic environmental factor. Socialism means where government or states owns all assets or we can say where government intervention is most. However, communism means all the assets and resources are owned by individuals.

The external environment of an organization represents factors outside the company that affect the company's ability to function. The business cannot control these aspects but can answer to these changes if it needed. Of course the main problem for business managers is to manage to respond early to these changes in the external environment, but this depends on how soon any change is identified. Most of external environmental factors for example, economic conditions, are reported daily in the media; managers have a wealth of information with the help of which they can develop strategic plans. Nevertheless, some external factors are difficult to identify, especially when they are changing very slowly or hidden from

The external environment of an organization represents factors outside the company that affect the company's ability to function. The business cannot control these aspects but can answer to these changes if it needed. Of course the main problem for business managers is to manage to respond early to these changes in the external environment, but this depends on how soon any change is identified. Most of external environmental factors for example, economic conditions, are reported daily in the media; managers have a wealth of information with the help of which they can develop strategic plans. Nevertheless, some external factors are difficult to identify, especially when they are changing very slowly or hidden from

External environmental factors are the macro environment affecting a business; they are factors outside the company and which they have no control over (Kotler & Armstrong, n.d.) these external factors bring about impacts to the company thus a company should always be prepared to react.

This business report will explore the internal and external influences which help shape businesses. The NSW government has All business decisions about how and what to produce are affected by the environment in which the business operates. Successful business managers have a good understanding of the environment in which the business operates. This allows them to respond positively to changes that take place and prepare for the impact such changes will have on their business operations. It is through these influences which shapes a business’s productivity and success.

There are many factors that need to be taken in account when opening a business. One very impactful factor is the economy. In a strong economy, disposable income is high and unemployment is low. As a result, consumers confidence during this time prompts them to purchase both essential and nonessential goods and services. Though during an economic slowdown, consumers become a lot more concerned about their expenditures and their job stability, this in turn leads to decreased revenue for businesses. Population also influences the total income for a business. In a place where the population grows very slowly, an individual has to deal with the possibility of not attracting a lot of new customers and sticking with their current market share. During this time it is very important to focus all efforts on customer service so the business does not lose current customers. Slow economy and population are not the only factors that reduce total revenue, a high unemployment rate can also drastically impact your business. Unemployment cuts down on a person 's wants, leading to decreased revenue for businesses.

Every organization has to analyze its business environment before making policies and strategies for its day to day operations, marketing and promotional efforts, and competing with the industry rivals (Loudon, Stevens, & Wrenn 2004). The key factors of the business environment that affect the business operations of a company include political, economic, technological, environmental, cultural, and demographical factors. In addition to these factors, an analysis of the competitive forces is also essential in order to assess the potential threats and intensity of rivalry present in the industry (Ritchie & Crouch 2003). If an organization does not give importance to the analysis of its business environment, it may not be able to compete in the industry for a long period of time (Hill & Jones 2007).

Political factors relate to way in which changes in the government and government policies can influence the business.

The environmental analysis is carried out on the internal and the external business environmental factors. The internal analysis describes the strength, weakness, opportunities and the threats of the organisation internally. But the

It is defined as all the forces or conditions that are available within an environment that affects an organization and business. It is also known as controllable factors because business can control them. The internal environment deals with the management of resources like human resources, physical resources, technology, monetary resources and others that constitute the organization in order to implement or execute a strategy. Internal environment also includes culture and other intangible aspects like teamwork, coordination, efficiency level of employees, employee’s salaries and monitoring costs. The strategy for competition should also be in sync with the internal resources especially the internal environment.

     A businesses environment creates many opportunities as well as problems for prospering businesses. The environment determines what a business can do by shaping and channeling its development. Businesses function within an environment by allowing entrepreneurs to raise capital and create profits freely. The supply of money available within a business as well as the economic stability through times of growth and recession have strong effects on businesses. Not only is the physical environment, including natural resources, pollution and energy as discussed previously, important, but many other

In this term of our discussion we’re talking about business environment. It’s like an overview of the whole business environment. Simply environment of a business means the external forces including the business decisions. They can be forces of economic, social, political and technological factors.

In today's world, no business operates in isolation without interacting with the environment where it operates. Irrespective of the nature of business whether public or private organization; manufacturing; service industry; local or international firm, its operations are inhibited by the environment in which it operates.

As the name suggests, “internal” business environment refers to internal factors and resources that affect the running of the business. This primarily includes the workforce where the employees play a vital role in affecting company’s performance. If a company has well trained or motivated employees, that company is likely to get good output from them. However, if the same company recruits unmotivated employees who do not perform well or dig in their heels when a new plan arrived, this will affect that company’s production levels and ultimately hinder its profitability. Another factor to consider is all the capabilities that a company possesses. The tool used to monitor them is the resource based