Internal Environment

The internal environment is a component of the business environment, which is composed of various elements present inside the organization, that can affect or can be affected by, the choices, activities, and decisions of the organization. An organization’s internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior.

1. Owners

Owners are the investors who have a direct interest in the welfare and prosperity of a business organization. They have the legal right on the property and assets of the business. Depending upon the types of organization and the nature of the business, they are directly or indirectly involved in the management of the business.

2. Board of directors

The Board of directors is the representatives of shareholders who are directly involved in the day-to-day operations of the company. The responsibility of the board of directors is to run the business in the best interest of shareholders and other stakeholders.

3. Organizational resources

The success and failure of the organization depend upon the effective and efficient utilization of these resources. In business operations all the resources have equal importance, however, human resources play a major role in mobilizing other resources.

4. Organizational structure

Organizational structure is the foundation of an organization involving job definition, division work, the hierarchy of authority and responsibility, and coordination among all the departments and members.

5. Organizational culture

It is a set of values that helps its members understand what the organization stands for, how it does things, and what it considers important. It is a system os shared beliefs held by the organization’s members. In every organization, there are systems of values, symbols, rituals, and practices that have evolved over time.

Therefore, the internal environment of the business is explained above.