To be able to acknowledge the difference between the Internal and External environment of a business, we must first understand the meaning of the two worlds. The two environments allow a business to flourish by focusing on the strong points of their surrounding and their limitations set by the management, board of directors, or even the government’s influence. The Internal Environment consists of conditions and forces which are within the organization. The External Environment is everything outside an organization’s boundaries that might affect the organization.
When looking into a business through the lens of an external environment, the first two facts which will stand out are the two areas which include the General Environment and the Task Environment. The General Environment is known for its set of dimensions in an organization involving its surroundings which create the overall context of the company. These dimensions consists mainly of economical, technological, Sociocultural, international and political legal. The economical dimension relates to the vitality and health of the economic system in which the organization operates. Not too far behind is followed by the technological dimension, which involves the methods available for converting resources into products or services. When a company has established itself well in the beginning phase, involvement of customs, mores, values, and demographic characteristics of the society in which the organization function become a stronger issue. This is referred to the sociocultural dimension. Followed by which involves the extent to which an organization is involved in or effected by business in other countries called the international dimension. The factor which ties all these aspects in the General Environment is the Political Legal dimension. This is more of the heavy involvement of the government’s regulations towards a business and also the relationship between the business and government.
The Task Environment is the specific external organizations or groups which influence an organization. The Task Environment involves the competitors, customers, strategic partners, regulators, and its suppliers. The biggest question related to starting an organization is what kinds of competitors we will have to face. An organization’s competitors are other organizations that compete with it for resources. The most obvious form of competition for resources in the market today is focused on the customer’s dollar. The Customer is the second dimension of the task environment or the involvement of anyone paying the organization for its product or services. This is mainly targeted by an organization working together with one or more other organizations in a joint venture or a similar arrangement. This is referred to as another dimension known as the Strategic Partners. With all these decision making would involve control, which is where the Regulators come into play. Regulators are elements of the task environment that have the potential to control, legislate, or influence organization’s policies. The last dimension in the task environment is the suppliers who are the organizations that supply and provide resources for other organizations.
As you have familiar with the surrounding of a business from the outside, let us now work our way in as the Internal Environment is discussed. When referring to this subject, we can easily start off with the Owner, or the people who have legal property right to that business. Followed by the owners are the Board of Directors. They are the governing body elected by the stockholders and charged with overseeing the general management of the organization. They also ensure that all tasks are running in a way that best serves the stockholders interest. All this is accomplished by the efforts of the Employees. In an organization, the employee’s are also a major element of an internal environment for an organization. The permanent employees of many organizations are organized into labor unions. When you become an employee, one thing is guaranteed, in order get ahead in the management, all that is required is the basics of hard work. Which is the next dimension in the internal environment, The Physical Work Environment is the final part of the internal environment. This is where the actual work of the employees are looked at with a magnifying glass.
By keeping these topics in mind, starting a organization will come with more ease. You will be more prepared for what is coming to you in any situation.