Classification of Environmental Factors

Classification of Environmental Factors

On the basis of the extent of intimacy with the firm, the environmental factors may be classified into different types namely internal and external.

1 Internal Environmental Factors

The internal environment is the environment that has a direct impact on the business. The internal factors are generally controllable because the company has control over these factors. It can alter or modify these factors. The internal environmental factors are resources, capabilities and culture.

2 External Environment Factors

It refers to the environment that has an indirect influence on the business. The factors are uncontrollable by the business. The two types of external environment are micro environment and macro environment.

According to KOONTZ & WEIHRICH, “Management is the process of designing and maintaining of an environment in which individuals working together in groups efficiently accomplish selected aims”. “Management is the art of getting things through and with people in formally organized groups”.

Ex: Human Resource Management, Financial Management.

The management functions are planning and decision making. Organizing, leading, and controlling are just as relevant to international managers as to domestic managers. International managers need to have a clear view of where they want their firm to be in the future; they have to organize to implement their plans: they have to motivate those who work lot them; and they have to develop appropriate control mechanisms.