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Internal Factors That May Affect Business Organisation

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The role of company leadership is an essential internal factor. Your leadership style and other management style impact organizational culture. Often, firms provide a formal structure with its mission and vision statements. Some cultural implications which result from leadership approaches are value of employees; the positive or negative nature; and effectiveness of communication level of family-friendliness.

In a high performing workplace, the workers not only have talent, but they also work better together. The employees and departments collaborate on ideas and resolutions. The internal factors basically include the inner strengths and weaknesses. Internal factors can affect how a company meets its objectives. Strengths have a favorable impact on a business. Weaknesses have a harmful effect on the firm.

Some examples of areas which are typically considered internal factors are:

  • Financial resources like funding, investment opportunities and sources of income.
  • Physical resources like company’s location, equipment, and facilities.
  • Human resources like employees, target audiences, and volunteers.
  • Access to natural resources, patents, copyrights, and trademarks.
  • Current processes like employee programs, software systems, and department hierarchies.

Companies must also consider softer elements like company culture and image, the role of key staff, operational efficiency and potential. The most common internal factors that might affect your business in various ways are:

ORGANIZATIONAL AND OPERATIONAL
These are a part of the operational and administrative procedures. This includes disorganized or inaccurate record keeping. Interruptions to your supply chain and outdated or faulty IT systems are also factors you should evaluate. If you do not overcome these, your customers might see you as unreliable. You can also lose all your data.

STRATEGIC RISKS
These affect your firm’s ability to reach the goals in the business plan. They could be due to the impacts of changes in technological evolutions or customer demand. These factors could pose as threats as they can alter how customers perceive your product. Based on these, customers might think a product is overpriced, dull and outdated.

INNOVATION
Your business needs innovation in order to keep up with competitors. It is essential to get one step ahead. Innovation could come in the form of marketing. It could also be through promotional initiatives in the marketing plan, staff training, and welfare. Embracing new technology is the best way to keep up with technological advancements. A lack of innovation can pose a serious risk to a growing business. No innovation will cause a company to remain boring. The company will become dull, stagnant and irrelevant.

FINANCIAL
The financial risks depend on the financial structure of your business. It is also dependent on your business transactions and the financial systems. For example, changes in interest rates or being overly reliant on one customer could affect business.

EMPLOYEE RISKS
Employees are vital to business success. But, there are risks associated with them. For an industry, strike action could lead to a lot of problems.