External Factors Affecting Business Environment

1.10 Internal Factors Affecting Business Environment:
Internal Environment: Internal environment refers to the factors internal to the firm i.e., factors existing within a business firm. These factors are generally controllable because the company has control over them and determine the potential of a company to meet the environment challenges.
The important internal factors are as follows:
Culture of the Organisation: It is widely acknowledged fact that any business organisation is normally undertaken for profit maximisation. Nonetheless, persons holding top positions in certain modern corporate enterprises have some values which influence their policies, norms, working language, systems, symbols practices and overall internal environment.

Organizations produce to sell, but if the spending power of the consumers decreases or they become averse to any particular type of product or service, the organization will be affected immensely. It is important therefore, that business leaders are able to gauge the change in tastes and preferences of customers so that they are better prepared for any eventuality.

Suppliers: Another factor that has the potential to interfere with the growth of a business is its suppliers. If the suppliers do not have formidable competition in their business, it is very likely that they may charge exorbitant prices to business houses. Creditability is a major issue, and if the suppliers fail to deliver on time, the whole operations can be stalled.

Social Customs:Social customs too, play an important role in shaping the prospects of a business. This factor has come to foray with the emergence of multinational organizations and their entry in conservative

Although, the consumer is in a win-win situation and gets many options to choose from, organizations for their part have to be on their toes with all preparedness to counter any marketing or publicity campaigns by the rivals to score over the consumers. If a rival is able to come up with an innovative product or service, other organizations then need to play the catch-up game, and this factor affects businesses immensely.
Last but not the least, geographical conditions and access to technology are immensely important factors which can affect the growth of a business. A business which finds it difficult to have access to people, capital, suppliers, and technology may struggle to keep up with its competitors. Similarly, inaccessibility to avant-garde technology will hamper productivity and the quality of the products and services.
The factors mentioned above have a major impact on an organization. Management thinkers over the years have brainstormed to get some answers on how to anticipate changes and prepare an organization to survive a sudden change in milieu, which to an extent have been successful, but still organizations around the world should avoid complacency and retrospect to find chinks in their armor, which if ignored can prove