Difference Between Internal And External Business Environment

These factors create certain expectations and requirements for organizations, which in turns determine the organization's direction and strategy. Whereas internal environment is made-up of several internal subsystems. Internal subsystems work together systematically and drive the organization in the direction which is in conformity to external environment demands; thereby making the organization effective and a good fit with external environment. (McShane & Steen, 2012, p.6)

* Factors of internal environment include risk management philosophy, risk appetite, board of directors, etc.

Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Two of the five forces that are the most significant for Capital One would be rivalry among competitors and threat of new entrants. Capital One has addressed rivalry among competitors in the past by getting new customers to keep their percentage level low for the new and existing customers. Also they have credibility among investor to find individual who are at high risk but will have a good potential with handling their credit card. Capital One threat of new entrants was a major concern in the first two to three years of their business. These concerns are now less intense as it has led to a cost advantage that would be impossible for new entrants to replicate. Capital One can approve these two forces going into the future by keeping up with the latest technology, catering to the community so they can continue to get new customers, and continue to come out with other products that will allow the company to grow in other fields.

Strengths and weaknesses come from the internal environment of the firm. Strengths can be exploited, built upon and made key to accomplishment of mission and objectives. Strengths reflect past accomplishments in production, financial, marketing and human resource management. Weaknesses are internal characteristics that have the potential to limit accomplishment of mission and objectives. Weaknesses may be so important that they need to be addressed before any further strategic planning steps are taken. A basic determination of a firm's relative strengths and weaknesses is often the first step in the internal evaluation. A hidden benefit in internal evaluations is the opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization. A manager's forced communications that occur across departmental lines produces an additional benefit in improving communication within the organization.

Internal Factors: Internal factors are the factors within the company, which affects the success and operation of business. The company can control these factors. Effective internal management is the key to the successful business.

These factors influence the internal environment of an organisation and they help in identifying the past and the present of the company, It also provides a frame work for reviewing strategy position and direction of the company.

An analysis of a firm’s internal environment can be completed through various methods. These methods are value chain analysis, three circle analysis, SWOT

Internal environment are SW which stands for strength and weakness, actually analysis of internal organization and external environment OT stands f opportunities and threats

For strategic analysis part, we used PESTLE and Porter’s 5 forces for external analysis; and SWOT and Value Chain for internal analysis.

It is defined as all the forces or conditions that are available within an environment that affects an organization and business. It is also known as controllable factors because business can control them. The internal environment deals with the management of resources like human resources, physical resources, technology, monetary resources and others that constitute the organization in order to implement or execute a strategy. Internal environment also includes culture and other intangible aspects like teamwork, coordination, efficiency level of employees, employee’s salaries and monitoring costs. The strategy for competition should also be in sync with the internal resources especially the internal environment.

PepsiCo Inc. is one of the leading brands in the world's food and beverage industry. It operates globally with a strong customer base and a wide array of products. This paper analyzes the general business environment for this leading food and beverage brand in order to assess what strategies it has been pursuing to operate in this challenging and complex environment. The analysis of internal and external environment has also been done in a view to figure out the biggest strengths, weaknesses, opportunities, and threats for the company. The final section gives an overview of the company's resources, capabilities, core competencies, and value chain which can help it to achieve a competitive advantage in its industry.

Internal Environment is the review that looks at the company operations, internal guidance as well as mission. Internal environment does consist of the value – chain analysis as well as the research based view tool.

The internal environment analysis focuses on current marketing strategy and performance, present and anticipated organizational resources, current and projected cultural and structural issues, and the customer environment. On the other hand, the external environment addressed competition, economic growth and stability, political trends, Legal and Regulatory Issues, technological advancements, sociocultural trends, and the SWOT analysis.

An analysis of the external environment includes the factors in a business’s external environment about a business's industry, competition, and political and social environments, and affects the firm’s strategy (Aaker, 2001).

The internal environment consists of the inherent competencies of the firm and the structure of its internal systems and processes. It is imperative for the organization to conduct an internal analysis