Components of Internal Business Environment

Components of Internal Business Environment

Internal is the environment that has a direct impact on the business. An organization’s internal business environment is composed of the elements within the group, including current employees, management, and particularly business culture, which defines employee behaviour. There are some internal factors which include in an internal business environment.

Value system – The value system of the founders and those at the helm of affairs has important element bearing on the choice of business, the mission and the objective of the organization, business policies and practices.

Mission and vision objective – Vision means the ability to think about the future with imagination and wisdom. Vision is an important factor in achieving the objectives of the organization. The mission is the medium through which the objectives are achieved.

Management structure and nature – The structure of the organization also influences also influence business decisions. The organization structure like the composition of the board of directors, influence the business decision of business as they are internal factors. The structure of the Organization may be a delay in the decision of making or some other helps in making quick decisions.

Human resource – Human resource is an important factor for any organization as it contributes to the strength, weakness of any organization. The human resource in any organization must have characteristics like skills, quality, high morals, attitude etc.

Internal power relationships – The relationships among all levels of the organization also influences on the business. The mutual coordination among those three is an important need for a business. The relationships among the people working in these three levels of the organization should be cordial.

Company image and brand equity – The image of the company in the outside market have an impact on the outside market has an impact on the internal environment of the company. It helps rising finance, making the joint venture, other alliances, expansion and purchase contracts etc. Brand equity also helps the company in the same way.

External Environment – It refers to the environment that has an indirect influence on the business. The factors are uncontrollable by the business. There are two types of External environment.

MICRO ENVIRONMENT –

  • Supplier
  • Customer
  • Market intermediaries
  • Financer
  • Public.

MACRO ENVIRONMENT –

  • Economic environment
  • Social environment
  • Political environment
  • Legal environment
  • Technological environment.

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