Internal Factors How internal factors impact on business activity - - PowerPoint PPT Presentation

Understanding Business

Internal Factors

How internal factors impact on business activity

What are “internal factors”?

• Internal factors are influences from within the

business which affect how well it achieves its

• bjectives
• Internal factors can influence the business for the

better or for the worse - this means they can have a positive or negative affect on success

• Internal influences are more easily controlled than

external influences

• Managers take decisions which affect the overall

impact of internal factors

Internal Factors which can impact business activity :-

• Human resources

(employees)

• Finance
• Current technology

Through the quality

• f work staff

produce Through a decision by staff to take industrial action As a result of their levels of skill, experience and training

Influence of Human Resources

Through the quality of the service given to customers

Influence of HR / Employees

HR Scenario Impact on Business Staff taking time off sick due to stress Unhappy staff look for work somewhere else Staff go on strike and production stops Customers complain about staff being rude and unhelpful A worker has been injured using machinery they haven’t been trained to use

TASK – Think about how each of the HR Scenarios will have an impact on the business

HOW TO DEVELOP A POSITIVE IMPACT

• Provide a programme of training (induction, on and off the job) to

develop employee skills

• Allow staff to participate in decision-making to make them feel

involved e.g. quality circles

• Provide financial rewards for staff who meet targets e.g. bonuses
• Provide a high quality working environment e.g. canteen, staff room,

gym

• Provide counselling service to help employees with problems e.g.

emotional, financial, alcohol and drug dependency

• Encourage activities to develop team bonding e.g. social nights
• Offer flexible working practices e.g. job-sharing, home-working and

flexi-time

Influence of HR / Employees

Cash flow position – this determines how much money is available NOW to achieve objectives

Ability to raise new sources

• f finance – this also affects

business plans e.g. growth

• r to fund a new advertising

campaign

High profits can help fund salary increases to attract better trained staff or buy new equipment to make company more competitive Often businesses need to reduce costs in

• rder to survive when cash flow is poor e.g.

shut down factories/shops, make staff redundant or re-locate overseas

Influence of Finance

Lack of funds, however, can make it difficult to pay back creditors e.g. suppliers, bank and HMRC - the business could go into liquidation

HOW TO DEVELOP A POSITIVE IMPACT

• Negotiate hard for the best credit terms from suppliers whilst

ensuring your own customers pay up quickly at the same time

• Try and spread repayments of large purchases over a period of

months/years

• Prepare cash budgets to identify cash flow problems in advance
• Give managers budgets to control their spending
• Shop around for deals
• Compare financial performance against a top performing rival

company of a similar size

Influence of Finance

Communication technology such as video conferencing can help staff work effectively on projects from different countries (ie collaborate)

Business who can afford to automate production (e.g. use robots) can reduce their costs and become more competitive However there must be back-up plan for when technology goes wrong e.g. faults, viruses and break-downs

Influence of Technology

Having an e-commerce facility

• n the business web-site and

using social media sites can help sell products to more customers world-wide

Influence of Technology

Technology Scenario Impact on Business Staff are worried they will be made redundant if new technology is introduced Customers have heard that their personal data is not safe in the company database Business is using old and out of date machinery in the factory The business does not have video-conferencing technology but has branches in different countries

TASK – Think about how each of the Technology Scenarios will have an impact

• n the business

HOW TO DEVELOP A POSITIVE IMPACT

• Businesses should keep up to date with technological advances in

their area

• Research into what top performing companies in their sector are

doing may give an insight into areas where technology improvements can be made

• Consult staff on all changes when bringing in new technology
• Carefully manage implementation of new technology to ensure it

is carried out smoothly e.g. training, bringing in extra staff to help

• Seek out opportunities for grants when buying new technology

e.g. from local and national government or the EU

Influence of Technology

Read through the information from the BBC Bitesize page Try the test at the end

https://www.bbc.co.uk/bitesize/guides/zxq43k7 /revision/1

QUESTIONS

1. What are the INTERNAL factors that affect the business? 2. Who can make decisions that have an impact on the internal factors? 3. Outline 3 things managers can do to improve the human resources / employees 4. Describe the effect of the business running out of cash 5. What will the effect on the business be if they can’t afford to develop an e-commerce site to sell online? 6. Explain the impact of well trained employees on the

• rganisation

7. Explain the impact of poor cash flow management on the business 8. Explain the impact of investing in new video conferencing technology on the business