Management: Internal and External Factors


In a company, management acts a platform on which various issues in the companies are presented including issues on growth of the company, profit and loses and the company’s ethics. However, how management handle these issues will depend on various internal and external factors which will have either positive or negative impact on management as whole. These factors will therefore destroy the existing management or build it.


Management is affected by both internal and external factors. Internal factors that affect management include; organizational policies, organization structure, employees skills and attitudes, use of technology, rules and procedures, communication channels, decision- making mechanisms. On the other hand external factors include; customers, competitors, government policy technology, bargaining and power of suppliers. For management to be efficient and productive, it has to devise ways of counteracting these influences.

Internal and external factors that impact management

Both the internal and external factors affect the way management functions. To begin with, internal factors such as organizational policies will determine to a large extent the layout of management that is, financial management, marketing, administration, research and development and finally planning. Management will in keep on being reorganized time and again to fit on the organization structure. For example, in cases where a new department has been formed it would require that an office be establish, new staff to be recruited and finally an overhaul of the existing system. Management would also be impacted both positively and negatively depending on the communication channel that exists in the company. In a situation of bureaucratic system of communication, management would be affected in a negative and this would as well affect the growth of the company. Employees would fill as if they are not part of the team and would in most cases feel inferior to other management authority. This will impact negatively on their production capacity and would translate into a low output. However, direct communication with management ensures empowerment of its employees in all level of management. They are allowed to express their ideas directly and hence feel valued and as result may provide management with innovative ideas that would result to good management and increase output. As for employees skills, it will help in running of the company. This is because relevant skills would be deployed in the appropriate management levels necessitating efficient utilization of the skills thereby impacting on the company in a very positive way. In cases where appropriate employees with the required skills are not deployed, there will be poor result and management will be deemed inefficient. Decision making mechanisms, will impact on the management positively or negatively depending on how it is being employed. Decision making process that incorporate all stakeholder in the company will result to better policies, strategy and plan that will enhance the growth of the company. As result, management will work appropriately unlike in situation where decisions are self centered and consultations are not made. This will initiate misunderstanding among various stakeholders resulting into poor management. Technology, on other hand has the capacity to improve on the company overall performance when used appropriately. This will therefore require adequate training in all management levels to incorporate technology in their system thereby increasing output through efficiency and strengthening management (Harte, 1997).

External factors such as customers will have both negative and positive impact depending on the influence they have on the company growth. Increase in customers would imply growth while a reduction would signal a decline in growth. Therefore, increase in customers will be an indication of good management and hence leading to promotion or increase in salary of those in management. However, decline in customers might result in demotion, sacking or redeployment to other areas of all those who were in management due to incompetence and inefficiency. Competitors, will signify where the management is competent or not. Therefore the ability of management to out compete its rival will be a sign of good management and would deserve applause. Government policies often influence how a company functions. For in the banking industry, reserve ratio and federal fund rate set by Central bank will affect the lending rate of commercial banks either positively or negatively. A bank that stay put to this and at the same time achieve its targets would have a sound management team hence would increase the capacity of the bank to compete effectively. Government policy will also affect company’s activities through its various rules and regulation hence limiting a company’s abilities to carry out certain tasks. Lastly, bargaining powers of suppliers will certainly influence management capacity. Therefore, for effective bargain, procurement and supply departments will have to be equipped with relevant personalities who have strong bargaining powers to act on behalf of the company. Failure to do so, the company will fail to procure required goods and services at a cost effective cost hence deeming the management involve as poor (Harte, 1997).

In conclusion therefore, management well being will be affected how it handles itself amid all these factor and it credibility will be judged on its success to handle these issues whenever they rise.


Harte, J. (1997). Management Crisis & Business Revolution. New Jersey, USA. Transaction Publishers