Сase of Microsoft

External components are subscribe toed to be extrinsic to an organization, those over which it has especial(a) or no avow. These affect the industry in which the organization is operating. much(prenominal)(prenominal) as the technological environment in the case of Microsoft which would affect the correct t individuallying technology sector. At the same time very herculean and leveraged players in a sector such as Microsoft would be open to shape the foreign environment to a certain degree by exercising leverages of control such as monopoly over software codes. disrespect this it is not possible for companies to affect early(a) major come in-of-door doers such as the social and political environment. An increasingly main(prenominal) outside cistron emerging today is environmental protection including laws, policies and stipulations which have to meet multinational standards.Frequently the around signifi shtupt outdoor(a) doer is aspiration. In the embryonal sta ge of emersion of an industry, a company may not realise competition and would not feel the clashing of the same. However an industry which is make maturity go away be posed greater threat from competition and this factor would have to be considered by the management as it would intrench on growth or even survival.Toyota Motor Co is a salient prototype wherein its entry into the Ameri backside as well as the global market has become a major external amity for all automobile manufacturers in the World, particularly legacy brands as customary Motors and Ford in the United States. The political environment of a sylvan also has a major role to play in the growth of any industry. China is the most prominent example of the same. Opening of the Chinese markets to external players has been one of the greatest factors which have contributed to Chinese growth in the past two decades.Internal factors on the other hand can be shaped by the management by providing it positive or negati ve inputs. These factors could include diverse issues ranging from human resources, branding, financial resources, intersection development, investigate, information technology and labor transaction. There is a frequent conflict mingled with the inter se priorities of the internal factors. Human resources assume a epochal factorial value in umpteen companies today and when linked with research and development will determine on how the company operates in a knowledge economy.IBM thus focuses its attention on a strong human resource base which can contribute to normal operations as well as research and development. Management of financial resources is an all important(p) panorama which has to be considered deliberately by any company. This will determine a companys financial viability at a given time. misdirection can ruin a company as indicated by the example of Enron which had to go into liquidity due to unethical financial practices of its management.Traditionally it is entangle that the management has an overriding control over the internal factors as inappropriate to external factors, though at times there is a decently influence of issues such as the social environment on govern branding. Many multi nationals find this quite difficult to absorb and even retail giants as Wal-Mart had to adapt their brand to conditions obtained in an external market as France before they could develop their chain in Europe.Information technology tightness has become a powerful internal factor which is affecting refinement of many companies. With development of concepts such as e commerce or e business and enterprise resource planning, it has become increasingly important for an organization to place all its operations on line. While this is clearly an internal factor, its external linkage cannot be ignored.The primary difference as would be seen from the examples above is the degree of control that a management has on factors affecting business. Where the co ntrolling factors are located externally, these are considered as external factors and need to be evaluated accordingly. However where based internally these will be considered within the ambit of internal factors.b. Discuss an example where an organization qualification be open to increase its control/influence over an external factor.To increase its control over an external factor, management would have to draw off into reflexion a number of factors including at times reviewing the core product profile of the company without sacrificing its overall brand image. Companies as Coca dumbbell and Pepsi have through with(predicate) their deep penetration in developing countries created conditions where they are able to control the entire soft drinks market in many locations in South and South East Asia altering social preferences and tastes of people.McDonald has been the most leveraged player in altering food and social habits which are external factors in developing countries. I t has achieved this by a judicious mix of topical anaesthetic products even introducing vegetarian burgers in India along with its traditional Burgers. Having changed its product profile, the company has been able to penetrate many traditionally hostile markets to American food industry.c. Since external factors can impact the profitability of an organization, why do we have financial performance as an internal factor?In determining whether a factor is to be considered as an internal or an external one, the recognize attribute to be considered is the ability of an organization to develop strategies and responses for growth and the control it has over the same. Applying this parameter would indicate that financial performance is an internal factor. positivity is just one aspect of financial performance of a company. positivity not only depends on the external environment including competition, economic factors, money markets and currencies but has greater linkage with internal fa ctors such as liquidity, bodily process and growth of capital.Profitability of a company is determined by vulgar and net profit margins, returns on assets and honor which are all considered as a part of internal factors. The structuring of the company finances to include debt and equity ratio which is a purely internal function also has an important role to play in profitability thereby leading to its consideration as an internal factor.d. How does misclassifying an internal factor as an external factor in the EFE impact the analysis?The EFE is a comparative analysis of heterogeneous factors which affect the external environment of an organization. The evaluation is based on freight age given to each factor based on coitus importance. Generally 10 opportunities or threats are considered in an EFE Matrix with each provided a weight age between 0 and 1 out of a sum total of 1 based on impact on profitability. There after ratings are also provided to each factor based on a scale of 1 to 4 with 4 being the best. The weight distribution will be balanced between threats and opportunities and will finally represent the strengths and opportunities in an organization. By including an internal factor the entire evaluation matrix is likely to be skewed by a minimum of 5 to 10 % which would emerge as a major flaw in the EFE, thereby resulting in neglect of other more important external factors.Based on the EFE the management will determine that the internal factor placed in EFE matrix can be controlled only in a limited way through internal inputs, thereby neglecting it to a large extent, resulting in a fox in performance in the particular field. Thus if labor relations has been placed wrongly in the EFE, the management will only consider external inputs that are likely to affect it such as effectual statutes and central memorandums and neglect internal management possibly resulting in woeful labor relations in the company.ReferencesDavid, Fred R. (1999) STRATEGI C MANAGEMENT. Electronically reproduced