Internal & External Factors

Business Culture

Internal. Business culture can be seen in the unwritten or informal rules that guide how people in the organisation behave.

Location

Internal. Location will have a direct impact on the sales and profits of some businesses. Factors to consider when choosing a location are: - visibility - cost - proximity to suppliers - proximity to customers - proximity to support services

Product.

Internal. Product influences affect a range of internal structures and operations within the business.

Resources

Internal. The four main resources of a business are: - Human resources. These are the employees of the business and are generally its most important asset. - Information resources. These resources include the knowledge and data required by the business such as market research, sales reports, economic forecasts, technical material and legal advice. - Physical resources include equipment, machinery, buildings and raw materials. - Financial resources are the funds the business uses to meet its obligations to various creditors.

Management

Internal. A flatter organisational structure reduces the number of levels of management.

Changes in the Market

External. Changes in the global and domestic financial markets will influence the cost of borrowing money and therefore directly affect the level of investment by a business.

Economic

External. Economic influences on a business relate directly to their economic environment, which is dependent on changes in economic growth.

Institutional

External. Institutions that influence business include government, regulatory bodies and other groups such as trade unions and employer associations.

Legal

External. Legal influences are the regulation (legal framework) within which a business must operate.

Political

External. Political influences are derived from both state and federal government policies and include taxation and the implementation of paid parental leave.

Social

External. Social influences, such as changes to fashion and culture, have the capacity to affect business sales and profits.

Technological

External. Technological influences can increase business productivity and communication.

Geographical Factors

External. Two major geographical factors that affect business activity are: - Australia's geographic location within the Asia-Pacific region - the process of globalisation.