Practical Application: Internal & External Factors That Impact Business

Instructor: Angela Janovsky

Angela has taught middle and high school English, Business English and Speech for nine years. She has a bachelor's degree in psychology and has earned her teaching license.

Use this resource after reading about organizational theory, incremental/radical change, and internal/external factors. Review definitions for factors that influence a business and explore an activity relying on your real world experience in a business.

Organizational Learning Theory

You have already learned about the Organizational Learning Theory, or the process of developing, retaining and transferring knowledge within an organization. Here, you will apply that knowledge in regards to the external and internal factors that influence that process.

This will also be a resource for practical definitions of common external and internal factors.

External Factors

External factors are ones occurring outside of the company that cause change within the company. These are beyond the control of the organization.

  • Lending conditions - the circumstances or requirements (including credit history) for getting loans or financing.
  • Government regulations - the laws enacted by federal or state government that control or impact the way a business can operate.
  • Competition - other businesses or sellers that work within the same market or produce the same services as each other.
  • Customers - people or organizations that buy products or services from a business.
  • Economy - the capital and resources available in a nation in regards to production and consumption of goods.
  • Technological advances - the innovation and progression of more developed equipment and machines.
  • Political conditions - the mood and opinions of the public relating to the subject of governing a nation or achieving power.
  • Social conditions - the environmental circumstances in society including economic status and attitudes of the masses. Other aspects include the public education system, popular occupations, and other demographic traits.
  • Resources - the materials, monies, workforce and any other assets needed to operate a business.

Internal Factors

Internal factors are those under the control of an organization. They often occur within that company.

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