Internal and external factors influence the function of a business and comprise its environment. Examples of internal factors include the company's products, employees and marketing. External factors include competitors, customers and economic conditions.
Internal factors that affect a business environment include anything present within the business itself. For example, the direction of the organization has a big effect on the business environment. Leadership within the company affects the organizational direction. Likewise, factors such as friendliness, communication style and level of positivity affect the organizational direction.
The strength of employees is another internal factor that affects the business environment. Hard-working, motivated, talented employees are more likely to provide good results. Additionally, employees should work well together. Strategic risks, innovation and financial concerns are other examples of internal factors for the business environment.
With external factors, the economy is a big influence on the business environment. The global economy as represented by market fluctuations is likely to affect any business. Politics relating to wars, terrorism and currency devaluation have a big impact on the economic factor.
Infrastructure is another example of an external factor. This includes items such as zoning laws, housing developments and highway construction. Changes in the infrastructure can have a big influence on the business environment. Other external factors include laws, finance and the weather.