Impact of Internal and External Factors on Business Organization - Sainsbury

\ Internal and External factors
INTRODUCTION
The business environment can be connoted as the
external forces, institutions and factors which are
beyond the control of business and affect and
influence the working of company. There are many
internal factors also which affect the working of
companies and these includes the competitors,
customers, government, suppliers, etc. The
environment in which a business operates is dynamic
in nature as it changes with changing time and needs
of the society. It is not static but rather it is complex
and changeable. The organization chosen for this
report is Sainsbury which is a supermarket chain
dealing in retail industry. It was founded in the year
1869. This report shall cover the relationship of
business with its external environment.
Technological- It includes the technological
advancement in the business environment which
influences the working of business. In context to
Sainsbury, it has recently developed the e-commerce
store of it which is helping in catering to tech friendly
generation. This is helping in attracting more customer
who are lazy to visit store and shop for themselves.
Legal- It involves the laws and regulations which is
important for the company to comply with in order to
prevent any legal obligations. As Sainsbury involves
various layers of decision making, the systematic
changes in its working must not be affected by its
business structure. It must take quick regulatory
approvals in order to be at toes to meet customer
demands as any delay may result in loss of market.
Environmental- It includes the environmental
conditions which influences the business and its
customers. In context to Sainsbury, the supermarket
chain produces high carbon footprint which is adversial
to current conditions of environment. The company
must take active steps to lower its environmental
impact so that it can contribute to protection of ecology
and environment.
External factors consist of those circumstances, influences and situation which is
beyond the control of business which affects the decisions of business made by
owner and its stakeholders. There are many external factors which have direct
impact on ability of business to accomplish its objectives. In context to Sainsbury,
the effect of external factors on its business environment is illustrated below-
Political- It involves the political influence on the working of the business which
affects its operations. In relation to Sainsbury, the biggest political factor which
affects the company is Brexit because as the UK is no longer part of European
Union, there are chances of increase in import rates which increases likelihood of
product price increase, thereby affecting the brand of company and losing
customers due to high competition which offers products at low rates.
Economic- It includes the economic condition of the country where the company
operates. In context to Sainsbury, it is dependent upon the road transport as it has
to ship the products across UK. This simply means that if there is rise in petrol and
diesel price, it will result in product price hike which will result in two things,
firstly loss of customers and secondly lack of fossil fuel will lead to looking for
alternate transport.
Social- It involves the socio cultural factors which affect the demand and supply o
offering of company. The large part of revenue generation for Sainsbury is from
sale of fast food item and the population shift to health conscious food may affect
its working as it has to change its product to healthy options.
Impact of external factors on business organization, Sainsbury
It is important for the business to analyse its business environment so that it can such decisions which are in harmony with them. These
influence the working and operations of business. In context to Sainsbury, the effect of internal and external environment is illustrated below-
How external and internal factor affect business organization.