Importance of Internal and External Environment

Every organization has the responsibility of ensuring that it has the capacity to critically examine both the external and the internal environmental factors that have an effect on their business operations. Those firms that get their examinations right stand a high chance of competing effectively in their industries while the reverse is true for those that get it wrong during the analysis process. Change is an inevitable factor that business must always learn to live with. Those that do not create changes ort change with the trends in the markets are normally bound to fail either in the short term or long term. The environmental factors can either affect a business positively or negatively, depending on a number of factors. The internal factors are those that take place within the organization while the externalfactors refer to those that take place outside the organization. Some of the internal factors that may affect a business include the changes created in the management team, the morale of the employees and the culture changes within the organization (Acquaah, 2012). Additionally, the changes in finances of the organization can also bring a change in the organization.

The management team of an organization is in most cases responsible for the administrative and the operational procedures that take place within that specific firm. Creating frequent changes within the management team can therefore impact negatively on the way the daily running of the organization is done (Makos, 2015). If the operations are affected negatively then the effect will most likely trickle down to the employees who may end up losing their morale. Similarly, the changes in the management team can result in interruptions within the supply chain thereby creating a conflict between the suppliers and the company.

The employees of an organization must also be taken serious at all times because they form a very essential part of the organization. It is of importance to make sure that the employees remain motivated at all times so that they have the good spirit of carrying out their duties. Moreover, motivation makes the employees to be hard-working throughout their tenure at the company. Research has shown that the motivated workers are more likely to produce positive results as compared to the unmotivated employees. Finally, the level of efficiency of the employees improves as the levels of motivation also improve.

Any company that desires to remain competitive in the industry must make sure that it has the financial strength that can keep it in the race. It is very difficult for a company to implement its strategies if it does not have cash in its accounts.  If the financial resources are constrained, then even the employees may become demoralized because the company will be forced to operate on a tight budget. Additionally, the profits that the company may make will also be constrained due to the limited financial resources (Acquaah, 2012).

The external factors just as already mentioned are the factors that take place outside the organization and are therefore not easy to control or change. The external factors are the most dangerous to an organization given the fact that they are never predictable and also hard to change. Some of the external factors that do affect an organization include the changes that happen within a given economy. Moreover, the government regulations and the political factors also do have an effect on a business. Threats from other companies may also impact on business operations because they can result in changes in prices of the goods and services (Kokemuller, 2012). The treat of new entrants into the industry as well as the bargaining power of both the suppliers and buyers may also have an effect on the daily operations of an organization.



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