Impact of Internal and External Factors on Business

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Context of Business
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Table of Contents
Introduction................................................................................................................................3
Body...........................................................................................................................................3
Conclusion..................................................................................................................................5
Reference List............................................................................................................................6
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Introduction
In the present dynamic world, the traditional methods of business operations are not highly
successful and competent enough in meeting the current market trends along with the
customer demand. Therefore, it is necessary for the business organisations to transform its
business methods with the help of the technological and other advancements in the market; in
this manner, being able to fulfil the present market demands and maintaining a strong
position in the market. With the initiation of globalisation, the business organisations have
gained huge opportunity of growth and expansion. However, in order to operate successfully
in the modern and dynamic market, it is necessary for the business organisations to learn
about the micro as well as macro environment of the place wherein they are operating. In this
assessment, the factors that impact the modern business in the global market will be outlined.
Furthermore, the significance of ethics in a business with reference to environmental, social,
economic and cultural issues will be highlighted.
Body
Internal factors affecting the business environment
According to Kuratko et al. (2014), the manager and employees along with the other
stakeholders are considered some of the most vital internal factors of a business. Other than
that, the suppliers, investors and the competitors are important micro factors that may have an
impact upon the business organisations. The different business associates of a company are
imperative allies that facilitates the business in overcoming form any sort of crisis that they
might experience during the different business operations. It is necessary for every business
organisation to form strong allies with their business associates to ensure survival during
crisis situations. In the words of Kuratko et al. (2014), the consumers are the most important
stakeholders of the business. Their preferences and demand play a vital role in determining
the growth and profitability of the business. It is necessary for every business organisation to
take into consideration the preferences and choices of the consumers; by this means, being
able to ensure effective productivity and performance of the business.
External factors influencing the business environment
As per the findings of vom et al. (2016), the key external factors or macro factors that may
have an impact upon the functions and activities of different business organisations are the
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technological, natural, demographic, socio-cultural, economic and political. As opined by
vom et al. (2016), in order to carry out smooth operations in the host nation, it is necessary
for every organisation to be well aware of the socio-cultural surroundings of the country. This
helps the company in identifying the preference and taste of the population residing there; in
this manner, facilitating the company in gaining a competitive edge in the extreme dynamic
market. Other than that, the social and cultural factors that the business organisations must be
apprehensive are religious beliefs, racial diversity, linguistic base and so forth. In addition to
this, another significant external environmental factor that may affect the activities and
operations of a business is the technological factor. It is believed to be a highly dynamic
environmental factor, as it keeps changing at a rapid pace. It is necessary for every business
organisation to create innovation and implement the same in other to keep in pace with the
ever-changing technology; by this means, being able to compete with its key rivals.
Changes in business environment and its impact upon businesses
The business world is changing constantly, and these transformations have a strong and
significant impact upon the business organisations. In the present world, the level of
competitive is ever-rising, the economic scenario keeps changing and there are new
regulations and laws being implemented that the companies need to comply with. With this
ever changing business environment, it has become essential for the business organisations to
come up with original and innovative products, processes and services. Furthermore, with the
change in the business environment and development in technology, the choices and demand
of the customers are also changing drastically; in that way, compelling the businesses to
adopt latest technologies and business ideas (Welford, 2014). The business organisations
those are not able to match the pace with the drastically and rapidly changing are not able not
able to sustain its position for long in the market; hence, making it necessary for the
organisations to take primitive measures in improving and enhancing its processes; thus,
surviving the aggressive and highly competitive market.
Ethical issues that may occur in business
With globalisation at its peak, the business organisations are exposed with different cultures
and ethical norms of different nations. This is both beneficial as well as unfavourable for the
businesses. This is for the reason that, different countries have different cultural and ethical
acceptability and it is necessary for the businesses to comply with the ethical norms and
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cultures of the nations wherein they operate in order to ensure smooth operation its business
process (Weiss, 2014). Additionally, being ethically correct facilitates an organisation to
remain transparent to its stakeholders; by this means, gaining loyalty as well as improving
brand reputation.
Ethical responsibilities in an organisation
In a number of instances, it has been stated that successful business and good ethics on the
odd occasion go hand in hand. When profitability is the key concern of the majority of the
business organisations, most of them do not consider ethics as an imperative part of the
business. However, in the present business world, ethics in business is considered an
imperative factor. The consumers as well as investors then to prefer the organisation that
considers ethical norms and carries out CSR activities when purchasing products or making
investments (Deegan and Shelly, 2014). Every organisation is therefore, liable to be ethically
responsible towards its consumers, employees and other important stakeholders in order to
run productively in the market. It must ensure providing its employees with equal rights and
opportunities; thus, ensuring employee retention. Furthermore, being transparent in terms of
their business initiates and other activities help the firms in building a good relationship with
its stakeholders; in this manner, improving its brand image and market reputation.
Conclusion
The above paper has shed light upon the noteworthy impact of the external environment
along with the internal environment upon businesses. It has been seen that, factors such as,
technology, socio-cultural, and so on play an imperative role in shaping the business scenario
of different companies. Additionally, internal factors like employees, stakeholders, customers
and so on also strongly affect the business. Moreover, it has been studied that, being ethically
responsible for the business organisations to ensure better brand loyalty and market
reputation.
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Reference List
Deegan, C. and Shelly, M., 2014. Corporate social responsibilities: Alternative perspectives
about the need to legislate. Journal of Business Ethics, 121(4), pp.499-526.
Kuratko, D.F., Hornsby, J.S. and Covin, J.G., 2014. Diagnosing a firm's internal environment
for corporate entrepreneurship. Business Horizons, 57(1), pp.37-47.
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management, 36(3), pp.486-495.
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Welford, R., 2014. Corporate environmental management 1: systems and strategies.
Routledge.
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