Explain the components of an organization's internal environment?

 Internal Environment

Organizations have their own environment consisting of many forces situated within organization which is known as internal environment. Factors of internal environment are controllable. Internal environment of the business provides strength and weakness to it. The internal environment of the organization consists of following factors:

i. Organizational resources: Employees are the most important part of organizations. Employees are directly involved in planning policies and implementing such policies. They have vital role to coordinate the other resources effectively. Management can develop human resources by providing trainings and planning the utilization and maintenance policies. Beside human resources technology, capital, raw materials etc. are other important resources influencing organizational effectiveness and productivity. Availability of such resources provides the strength where the shortage of the resources provides weakness.

ii. Organization structure: The overall framework of organization's roles, rules, and hierarchy and authority-responsibility system affects the organization objectives. It also includes the departmentation process, interrelation of different units, groups and individuals to each other. Formal and informal organization structure affects the role and authority of an organization. Organizational structure is the key factor for employee motivation and hence organizational success.

iii. Organization culture: Culture includes the shared norms beliefs and values that guide the employee's behavior in organization. It helps new members to understand about the goals, objectives, functions, operating system of the organization. Culture provides the shape for the overall effectiveness of the organization. Organizational cultural has a powerful influence on the process of organizational change and decision making.

iv. Organization goals and principles: Every organization has specific goals which are desired outcomes of that organization. Each activity of organizations is conducted within the framework of goals. Policies are general guidelines for managerial decision making. These policies are developed by top management of organizations. Organizational goals, objectives, policies, are also an important factor of business environment.

v Other factors: Trade union and its activities affect the organizational activities. They want to reduce the working hours and to increase the financial as well as non-financial facilities to employees. Share holders also influence the business environment as they demand more dividends as quickly as possible. Likewise, communication systems, natural of products, size of organization, leadership style, control system, etc. are also the internal factors of business environment.