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These are the Different Kinds of Factors that Affect your Business

Managing a business isn’t easy. From mastering budgeting tips at Live Well to keeping an eye out for the next cultural trend that will sweep the markets, management leaders must also be aware of the factors that can affect the way a company operates.

If you want your business to succeed, reading this comprehensive guide will show you the internal and external factors that can change the way your organization is structured.


Internal factors are also known as controllable aspects that take place within the business organization. Because they take place within the company, high-ranking officials have the power to control them.

Before you can change these factors, however, it’s important to learn about their role in your organization and how subsequent changes will affect your business

Company leadership

Company leadership is integral to your business since these leaders determine the direction of the company. Leadership style and your process of managing employees will impact organizational culture because everything rises and falls on leadership.

Where the leaders go, employees will follow. Becoming aware of your power as a leader in the company is the first step to bringing the change you want.

Financial resources

Some financial resources include company funding and its sources of income. They are crucial for business policy decisions, especially for corporate companies.

Company location

One thing potential employees look at in a company is their office location and its surroundings. They ask questions like, “Will I be able to get here on time? Is this place easy to get to? How near is my building to other offices and/or restaurants?”

Being located in a central business district can help increase your appeal as a company but if the cost of getting there is barely covered by your salary, applicants will most likely look for another company to work in.

Equipment and facilities

If employees have to bring their own desktops to work and walk to the next office to relieve themselves, your organization might not be doing so well.

Your business is only as good as your employees and the availability of equipment and facilities. Luckily, these factors are controllable and can be changed for the better with the right strategic decisions.


The outside world can also affect your business. Unlike internal factors, external factors are uncontrollable aspects that everyone is at the mercy of.

Even though these factors cannot be controlled, their effects can be minimized if leaders understand the way they work.

PESTLE analysis focuses on the six most important factors that can influence your organization: political, economic, sociocultural, technological, legal, and environmental.


Political factors are essentially regulations imposed by the current government that can change the tide of favor to and from your company.

Leaders of an organization must always be updated with the current political atmosphere and make the necessary changes needed to stay afloat.

Things like employment laws, tax policies, and foreign trade regulations are some examples of political factors that can alter your operations.


Economic factors are in association with supply and demand, services, and money, which directly affect your trade. The state of the economy can predict whether companies will thrive or be threatened with going out of business.

Inflation, consumer behavior, and interest rates can either be an advantage or a disadvantage to your organization.


It’s without a doubt that society is continually evolving. Trends and tastes vary so much within a year, what more for a decade?

If you conduct business overseas, societal and cultural changes have an effect on your company depending on your consumers’ attitudes and habits towards your products and/or services.

One of the most significant changes in society is the emergence of social media. Today, more companies operate digitally than they do in the physical world because their consumers reside there. If you work in the marketing industry, you’ll know these changes all too well.

Although your mission and vision statement need not change based on the whims of your customers, your business must adapt to these changes and provide modern solutions to modern problems. It’s good to stick to the traditional route, but it’s not so good when no one sees your efforts.


With technology ever-evolving, it becomes an important tool to make operations more efficient and functions more improved. Technological factors are those that concern the existence, availability, and advancement of current tech.

More and more companies are beginning to rely on machinery than they do with their personnel, so updates and developments for their devices can significantly shape the way they conduct business.


PESTLE analysis defines legal factors as those that refer to how the law affects the way businesses operate.

Legal factors are so effective that passing one law may put you out of business (if let’s say, lawmakers deem your product harmful and make it illegal.)


The current state of our climate and the availability of non-renewable goods are examples of environmental factors that can influence your line of work.

These natural resources are the foundations on which your company stands. We tend to minimize the importance of the environment and think it doesn’t sway our organization whatsoever but with an unstable environment, our physical connection to the Earth will be affected, and thus, the way we live our daily lives including our businesses.

By understanding and becoming aware of these internal and external factors, you can keep an eye out for them and take the necessary action to minimize its effect on your company.


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Written by Nat Sauteed

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