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Internal and External Factors Affecting a Commercial Organization

Home Articles Internal and External Factors Affecting a Commercial Organization

Internal Factors

There are many factors within a business organization that have a huge impact on the success. Fortunately, the organization has the control of these factors in its hands.

One of the most common internal factors is the role of company leadership. An inappropriate leadership style and any other management style in the organization will affect the internal culture. Following are some of the implications that result from leadership styles:

  • Nature (positive or negative)
  • Ethics of employees
  • Communication level

Another essential internal factor is the strength of the employees. Basically, the inner strengths and weaknesses can also be counted as the internal factors. Internal factors may affect the way an organization works to accomplish the objectives.

Following are some of the most common internal factors that affect the business organization in various ways.

  1. Strategic Risks

In any business plan, the strategic risks affect the ability of the company to achieve the target objectives. This may be because of the changes in the technological advancements or changes in the demand of the customers. These factors may sometimes act as threats to the organization as these may change the way the customers recognize a product or service. These are the factors due to which these customers think that the products are dull, high-priced or obsolete.

  1. Organizational and Operational

Another internal factor is based on organizational and operational procedures. This involves unsystematic and inaccurate record keeping. It is very important to evaluate the factors that disturb the supply chain and damaged IT systems. Thus, your business will be considered as an unreliable one by the customers if not worked upon timely. There are chances that you might lose all your business data.

  1. Innovation

In order to stand successfully in the market to keep up with the competitors, your business needs some kind of innovation. Innovation in your business may occur in the form of marketing style or promotional edges in the business plan. Also, it is necessary to keep up with the technological enhancements by learning and using the new technology.

Lack of innovation in the business organization will leave a boring impact on the customers and there are chances that the company will become dull and still.  

  1. Financial

The financial structure of a business determines the financial risks. The risks also depend upon the business transactions and the financial systems. For instance: alterations in the rates of interest, or being overly subjected to only one customer could affect the organization.

  1. Infrastructure

If the workers working in the company are well-trained and enthusiastic, it is important to make sure that the infrastructure of the organization is good enough for all the functions. With the new and modern facilities, constant power, internet, and a Wi-Fi connection and much more, there are chances that the organization will perform better. In other words, the better the infrastructure your company has, more opportunities will it get to perform successfully.

External Factors

There are many external factors that affect the business organization. Following are some of them to mention:

  • The Economy

Even a well-settled business may not be able to survive in the bad economy. If the customers lose their jobs or take up jobs that can hardly support them, they will spend less on gifts, luxury goods etc. the higher interest rates of the credit cards can dispirit the customers from spending. Of course, the economy is not under your control, but understanding it can help in spotting threats and opportunities.

  • Competition

When you set up your company, there are chances that you fight against the well-established, more experienced businesses in the same industry. Competition can either break you or make you. Thus, it is important to find out different ways that make you unique in the market.

These are some of the internal and external factors that affect the businesses. All these factors must be taken care of at the time of setting up a new business.

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