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Internal and External Business Environments

The ability of a business/organization to remain relevant in an industry relies on both internal and external business environments. Internal and external business environment involves different factors that influence the operation of a firm direct or indirect. Both internal and external business environments keep changing. The performance and success of a business is determined by the management’s ability to manage and adjust to changes in the external environment. The present paper describes the impact of internal and external business environments on a business in relation to how the management responds to changes.

Even though external environment factors are exterior to the company, they significantly influence its operation, reputation, growth, and survival. The external business environment keeps changing, which requires entrepreneurs to adopt new changes when necessary. There are numerous opportunities and risks associated with external factors (Baseman et al., 2011). Market, a main component of the external environment, is defined by demand and consumers’ expectations. Consumer expectations and demand is unpredictable and therefore keep changing. Factors that change the external business environment include technological discoveries, new legislations, taste changes, and lifestyle. Technological discoveries such as social media and web-based applications have provided more opportunities to different companies. In the contemporary world, the market and customer base are gradually moving to social media and other web-based forms. With the advancements of the internet and smartphones, consumers can now purchase various products online at their convenience. The introduction of the internet and smartphones has created a wide platform for marketing and selling different products. The internet enables entrepreneurs to market and distributes their products locally and internally. The internet has also led to an increase in customer base due to a wide marketing platform, which has increased the demand for goods and services. An increase in demand creates more opportunities for firms that produce and supply goods.

The other factor is a lifestyle change. Lifestyle involves fashion, hobbies, recreation, culture, and personal preferences. The current trends on social media have a significant influence on lifestyle. People tend to copy the lifestyle of celebrities and prominent people, who keep changing their fashions. A change in fashion or recreation provides relevant companies with more opportunities. As lifestyle changes, companies that quickly adapt to the changes enjoy a wide and diverse customer base.

An example is the introduction of Hoodies. As numerous photos of celebrities wearing hoodies flocked social media, the global demand for hoodies increased. Demand has led to increased production and supply of hoodies from relevant cloth designing companies.

Most entrepreneurs have introduced various independent units in their production line. Setting up independent functional units is a step towards a company’s success, as it ensures that each independent unit attains its full potential in production.

Besides, the integration of functional units makes it easier for the management to assess the potential of each functional unit. Integration of independent units in an organization involves incorporating mechanisms that will enable different operational units in the supply chain management to interface with each other. However, most sections in an organization tend to be interdependent. The operational management should establish a mechanism through which a company can balance operational interdependence and independence.

There exist several mechanisms through which the management can integrate independent units. One of these mechanisms is by introducing teamwork within various operational management units. One advantage of teamwork is that it enables a firm to combine resources from several functional units (Baseman et al., 2011). Combing resources from different functional units help in the attainment of goals and objectives. However, the success of this method depends on the efficiency and goodwill of every member of the team. The presence of a weak link might affect the initiative undertaken.

The other mechanism of integrating independent units is centralized supervision. Supervision is a significant aspect of business operation, as it ensures proper coordination of different activities within the company. Centralized supervision facilitates integration by ensuring independent operational units are accorded some interdependence. One main disadvantage of centralized supervision is that the entire mechanism depends on the initiative of a centralized supervisor, making it a risky way of integration.

Today’s organizations are facing unprecedented disruption due to changing customer expectations. The current trends in the global market are contrary to the initial competitive advantage that placed various organizations in a defensible position (Baseman et al., 2011). External business environments that surround different companies are constantly changing. Consumers who are the main component of the external environment are massively changing their demands, expectations, and preferences. Advancement in technology such as social media has seen numerous business transactions conducted through the internet. Business managers now rely on the internet to market and distribute their products across the globe. Firms whose management adapts to the changes and works towards meeting new customer needs remain relevant.

In contrast, firms that tend to ignore the changing market are rendered irrelevant in the global market. As a result, various organizational managers compete for the global market, which is now controlled by technology. For instance, Amazon topped the book market when it moved its operations to the internet. Following Amazon’s performance, various companies moved their operations to the internet, creating high competition in the global market (Fitzgerald et al., 2014). This implies that technological discoveries and advancements are adopted by a massive population. Flexible firms capable of adopting change remain relevant, while new companies outshine companies that take time to accept change. Therefore, the performance and success of a business are determined by the entrepreneur’s ability to manage and adjust to changes in the external environment.

Bottom of Form

In business management, a learning organization is a firm that facilitates the training of its workforce and adapts to changes in the external business environment. According to peter (2017), a learning organization has five components that include system thinking, team learning, shared vision, mental model, and personal mastery. The five components enhance performance and are imbued into the workforce through training. Other than the five components, an employee in a learning organization needs some unique skills to enhance their efficiency. Such skills include communication, time management, and critical thinking. Communication is the basis of teamwork in an organization. The ability to listen and communicate to other employees while sharing ideas, expectations, responsibilities, and deadlines determines the level of competence of an employee. The other skill is time management. A learning organization is a firm that quickly adapts to change, which requires an employee with effective time management skills. Another skill is critical thinking. Critical thinking enables an employee to make more formal decisions regardless of other employees’ decisions.

In a highly involved organization, employees require teamwork, effective communication, and proper listening skills to work efficiently. An employee with teamwork skills will always collaborate with others to share creative ideas and approaches towards achieving the organization’s goals. Also, communication is an important skill for employees working in an involved organization. Effective communication enhances teamwork, which is the basis of an involved organization. An employee with effective communication skills can consult and make recommendations where necessary. An involved organization is a firm that contains numerous managers and employees. For this reason, it is important to have proper listening skills that will enable an employee to take orders, understand, and interpret specific duties.

Having learned and acquired key skills needed to work efficiently in both learning and involved organizations, I would enjoy working in both environments. In this case, both the learning and involved organizations suites my personality. A combination of these skills will boost my performance and strengthen my relationship with the management and other employees.


Baseman, S. T., & Snell, S. A. (2011). Management: Leading and Collaborating in a Competitive World McGraw-Hill. New York.

Fitzgerald, M., Kruschwitz, N., Bonnet, D., & Welch, M. (2014). Embracing digital technology: A new strategic imperative. MIT Sloan management review, 55(2), 1.

Senge, P. M. (2017). The leader’s new work: Building learning organizations (pp. 51-67). Routledge.


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