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External Internal Factors

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External Internal Factors

External/Internal Factors

Organizations have external and internal factors that impact management. The four functions of management are: planning, organizing, leading, and controlling. This paper will explain the impact that external and internal factors play in these functions by looking at Microsoft Corporation, a large global high-tech company.

Internal and External Factors

There are various internal and external factors that impact the way in which the four functions of management, planning, organizing, leading, and controlling are affected. In the external environment organizations exist in a competitive and macroenvironment. Company leaders must stay abreast of the financial community, economic trends, technological developments and existing legal constraints

The competitive environment includes an organization's business competition, its clients and customers, and its suppliers. The macroenvironment are the social and natural elements that affect organizations, including legal, technological, political, and demographic. An organization's leaders must take the external elements into account when formulating their strategic plans or face serious consequences. In May 1998, Microsoft Corporation faced an unprecedented antitrust lawsuit when the U.S. Department of Justice filed suit against them claiming that Microsoft had violated sections one and two of the Sherman Act. The government argued that Microsoft had taken actions that were anticompetitive to prevent competitive innovations. Microsoft countered that the organization's success was a result of their innovations and competitive insight, (Fisher & Rubinfeld, 2001).

Organizations must also assess their internal strengths and weaknesses. Internal factors include financial strength, human resources activities, the strength or weakness of a company's manufacturing, production, or service delivery activities, research, and development. An internal analysis can provide an organization with an understanding of how they can compete through their internal resources. A company's resources can be advantageous if they are rare and not readily available to all competitors (Bateman &Snell, 2009). In recent years Microsoft has faced challenges with their workforce not being motivated because of their frustration with the company's bureaucracy. Employees believe that the innovation that Microsoft is renowned for, has been stifled because they are too busy focusing on the monopoly products, rather than coming up with the next generation technology. This has led to discontent among the employees and is impacting the organization's ability to lead and plan effectively for the future (Green, 2005).


Microsoft has offices on each continent in the world as well as offices in a majority of the countries within each continent. This helps the company by possessing an office close to each customer. The customer can contact the office locally and speak with a person who is within his or her own culture that has the answers to the questions about any product that the customer may be using. This allows the company to stay in line with its mission of helping all the businesses and people around the world realize their full potential. It also allows Microsoft the opportunity to use the knowledge of skilled technical workers in the different regions of the world that may not be available in the United States alone.


Microsoft has many products available for both business use and personal use. These products range from Microsoft Office and Windows Seven to personal use technology like the Xbox video gaming system, and the Zune MP3 players. They also have online search tools like Bing and servers and tools to help either businesses or individuals protect their computers or visual studios to help a company hold meetings from different places online. Microsoft has proven that they will use any new technology to help serve their customers. All of these different programs or products make it easier for Microsoft to show the ability they have as a company to produce quality technology for many types of users.


New technology is publicly released at least once a year. The newest innovations come from the scientists and technical abilities of each employee or customer. Microsoft uses the new technologies that are available to improve the current technology that was in place. When Sony came out with the new PS3, Microsoft worked to build a better Xbox 360 unit that would be comparable. A customer can purchase an Xbox 360 Live that has more storage abilities because of a larger hard drive, and the price is still lower than that of the PS3.


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