External factors affecting business planning

You can share it with key employees so they too understand where the company is going.

External environmental factors affecting business

There will be inflationary tendencies if interest rates are higher for long periods. As an example of how government policy has an effect, is that many organisations depend on government financial assistance. If your strengths include a top sales force, for example, they may be able to easily introduce a new technology or product line to established customers. Interest rates, the availability of credit and consumer loans are external factors you rarely can control. High inflation rate decreases real wages, i. Your company's strengths and weaknesses are internal factors. If equipment is in short supply or not of the expected standard, then staff may be hindered in the performance of their duties, or if equipment is used by customers then customer satisfaction will fall. Businesses that depend directly on a good supply of water e.

To give a few examples, think of: how the weather might affect a food production company, how the development of technology might affect a traditional publishing company, or how the actions and success of competitors might affect any company. When costs of production go up, companies should try to withhold increasing prices for as long as possible.

The effect of climate change will not fall equally on all nations and all businesses.

Internal and external factors affecting healthcare organizations

However the managers of a business or organisation do have some measure of control as to how the business reacts to changes in its external environment. Suppliers have a huge impact on your costs. This version still needs the insight from your external analysis. A person may go on holidays to exotic holiday locations and may spend a fortune to travel, but may dine in very ordinary restaurants. When your cash resources are too limited, it affects the number of people you can hire, the quality of your equipment, and the amount of advertising you can buy. High interest rates have detrimental effects on the economy. A company can directly influence what it works on and hence what it turns into strengths , and what it neglects or forgets about which become weaknesses. There are numerous criteria considered as external elements. On the other hand, if a factor prevents the development of the company, it is a weakness.

Economic conditions are global as well as national, and when there is a global financial crisis as inchanges in the external environment can be dramatic.

Internal and external factors don't exist in a vacuum.

external environment factors of organisation

It can be said that without the big investment and stable financial resource, Coca Cola success would not be guaranteed. Again, Apple cannot stop this from happening, making it external, but they can still choose how to approach the challenge. Social change is the most difficult variable for marketing managers to forecast, influence and integrate into marketing plans.

External factors affecting business planning

It includes your sales and marketing strategy and your projected profits. There are a slew of factors to take into consideration that usually are beyond your control. Nowadays, customers do not tolerate ineffective products and sloppy behavior of marketers. Not only will competitors come and go, but they will also change marketing strategies, product lines and prices. You can find this sort of information by reading annual reports, press releases, presentations to investors and articles about the company. On the other hand, if a factor prevents the development of the company, it is a weakness. Changing Structures of Families Multiple lifestyles have evolved because people can choose from a growing number of products and services, and most have the money to exercise more options. Political Like law, changes in government policy can be well notified and discussed, or without warning. After you line up financing, find a suitable location, hire staff and organize a potentially successful business plan, you must turn to external factors to effectively predict your future. Parents may be staying with them or they may be living in different cities.
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What Are Internal & External Environmental Factors That Affect Business?