What Is The External And Internal Environment Of Business?


6 Answers

Simon Lazarus Profile
Simon Lazarus answered
The formula for business success requires two elements - the individual and the environment. Remove either value and success becomes impossible. Business environment consist of all those factors that have a bearing on the business. The term 'business environment’ implies that those external forces, factors and institutions are beyond the control of individual business’, organizations and their management and can affect the business enterprise as a whole.

A business’ environment influences the functioning of the business system. Therefore, a business environment may be defined as all those conditions and forces which are external to the business and are beyond the individual business unit, but they all operate within it. These forces are customers, creditors, competitors, government, socio-cultural organizations, political parties national and international organizations etc. Some of these forces affect the business directly whilst some others have an indirect effect on the business.

Business environments are the sum total of all things external to business firms and are aggregative in nature.

The external environment covers parts of the organization which are usually unable to be controlled within the organization and include factors such as social, legal, technological and political factors. The external environment can also include the people outside your organization who are also a part of it in some or the other way This can include society, government and stakeholders.

The internal environment is the environment that has a direct impact on the business. Here there are some internal factors which are generally controllable because the company has power over these factors. It can alter or modify factors such as its personnel, physical facilities, and organization and functional means, like marketing, to suit the current environment. The value system of the founders and those at the helm of affairs has an important bearing on the choice of the business, its mission and the objectives of the organization, including its business policies and practices.
Lily James Profile
Lily James answered

External environment of a business refers to all those factors that directly influence the working of the business. However, these factors are outside the control of the business.

External environment shapes the kind of business activity you can have. That is why it is extremely important for business. The factors that constitute the external environment include:
- Political and Legal factors
- Economic factors
- Social and Cultural Factors
- Technological Factors
- Competitors
- Demographics of consumers

Now whatever the business might do , it can not control all the above factors. It can only plan its business by studying the trends in these factors closely. The Political and Legal factors define the government policies. These policies determine what kind of relaxation the business has. The Economy defines that kind of economic or business activity it can have. The Social and cultural factors along with the demographics of the society defines the acceptability and sales of that product. The technological factors define the technology and its affects on business. Lastly, competitors are also one of the influential factors.

Kele Jiang Profile
Kele Jiang answered
Market competition is one of the external factors to make the company have to change.Because if the company don't change, it will be phased out by customers.
Do you think 1-800-Got-Junk? Faces more of a calm waters or white-water rapids environment?
Explain. What external and internal forces might create the need for the company to change?
Anonymous Profile
Anonymous answered
The external environment covers parts of the organization which are usually unable to be controlled within the organization and include such factors as social, legal, technological and political factors

The internal environment is essentially all the factors that are able to be controlled by the organization. These factors are usually things like technology advancement, e-commerce and business expansion
thanked the writer.
patricia hunda
patricia hunda commented
I think the business internal environment is also basically the factors suroundings and circumstances that occur inside the business and may affect its operations both possitively and or negatively. Eg. Organisational structure of a business
Aisha Profile
Aisha answered
The external and internal factors in an organization have a deep impact on its workings. The internal factors like employees effect the productivity and working of the company. Other internal factors like suppliers are also important for smooth production function, However, it is fairly easy to control these internal factor as management can devise plans and policies to manage them. External factors, on the other hand are beyond the control of the management. The company cannot control government policies, nor can it control famines, strikes, earthquakes, technological advancements etc. It can just make contingency plans to save itself from complete disaster.

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