Business Environment

Internal and external business environment

Internal and External Business Environment

Businesses operate within environments they can and cannot control. The internal environment (inside the business) includes management, employees, resources and culture. The external environment (outside) includes customers, competitors, economy, government laws and technology.

Example

Business Environments

Internal (can control): • Management decisions • Employee skills and motivation • Products and quality • Business processes External (cannot control): • Economy (recession, growth) • Competition (new competitors entering) • Government (new laws, tax changes) • Technology (new inventions) • Social trends (what customers want) • Natural (drought, floods, pandemics)

Note

Remember

Successful businesses adapt to their external environment while strengthening their internal environment. A SWOT analysis helps: Strengths and Weaknesses (internal), Opportunities and Threats (external). SA businesses face challenges like load shedding, high crime and economic uncertainty.

Key Vocabulary

Internal environmentFactors inside the business that it can control

External environmentFactors outside the business that it cannot control

SWOT analysisTool examining Strengths, Weaknesses, Opportunities, Threats

AdaptTo change in response to new conditions

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Internal environment

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