Сase of Microsoft

External factor outs ar considered to be extrinsic to an organization, those over which it has limited or no aver. These affect the industry in which the organization is operating. Such as the technological environs in the case of Microsoft which would affect the entire information technology sector. At the same time very mesomorphic and leveraged players in a sector such as Microsoft would be able to shape the outside(a) milieu to a certain degree by exercising leverages of control such as monopoly over software program codes. Despite this it is not possible for companies to affect other major out-of-door factors such as the companionable and political environment. An increasingly important external factor emerging today is environmental protection including laws, policies and stipulations which suck in to meet international standards.Frequently the most signifi appriset external factor is contest. In the embryonic percentage point of harvest of an industry, a comp a ny(prenominal) may not encounter competition and would not feel the meet of the same. However an industry which is reaching maturity will be posed greater threat from competition and this factor would thrust to be considered by the management as it would impinge on evolution or level off survival.Toyota Motor Co is a salient example wherein its entry into the American as hearty as the global market has become a major external consideration for all locomote manufacturers in the World, particularly legacy brands as General Motors and Ford in the United States. The political environment of a country 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 bingle 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 negative inputs. These fa ctors could include diverse issues ranging from human imaginations, branding, fiscal resources, product development, research, information technology and labor dealings. There is a frequent employment between the inter se priorities of the privileged factors. Human resources assume a significant factorial rank in many companies today and when linked with research and development will break on how the play along 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. vigilance of financial resources is an important facet which has to be considered deliberately by any company. This will determine a companys financial viability at a given time. Mismanagement 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 felt that the management has an overriding co ntrol over the internal factors as opposed to external factors, though at times there is a powerful influence of issues such as the affectionate environment on say 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 absorption has become a powerful internal factor which is affecting enlargement of many companies. With development of concepts such as e commerce or e business and opening move resource planning, it has become increasingly important for an organization to place all its operations on line. dapple this is clearly an internal factor, its external linkage cannot be ignored.The primary difference as would be seen from the examples to a higher place is the degree of control that a management has on factors affecting business. Where the controlling factors are located extern ally, these are considered as external factors and need to be evaluated accordingly. However where establish internally these will be considered inwardly the ambit of internal factors.b. Discuss an example where an organization might be able to increase its control/influence over an external factor.To increase its control over an external factor, management would have to come into consideration a number of factors including at times reviewing the core product profile of the company without sacrificing its overall brand image. Companies as Coca Cola and Pepsi have through their deep penetration in create countries created conditions where they are able to control the entire soft drinks market in many locations in southmost 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. It has achieved this by a judicious mix of local products ev en introducing vegetarian burgers in India along with its traditional Burgers. Having changed its product profile, the company has been able to penetrate many traditionally unlike 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 key 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. Profitability is just one aspect of financial performance of a company. Profitability not only depends on the external environment including competition, economic factors, money markets and currencies but has greater linkage with internal factors such as liquidity, activity and growth of capital.Profitability of a co mpany is determined by gross 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 right 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 various factors which affect the external environment of an organization. The evaluation is based on weight age given to each factor based on relative 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 dissemination will be balanced between threats an d 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 marginal 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 settle 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 legal statutes and central memorandums and neglect internal management possibly resulting in poor labor relations in the company.ReferencesDavid, Fred R. (1999) STRATEGIC MANAGEMENT. Electronically reproduced