The main factors that effect engineering firms (internal and external) can be described in the categories that appear in the Venn diagram below.
Through examining the Venn diagram below we can see clearly how these main areas impact and interelate to eachother.
In order to explore this topic further it is necessary to understand which areas are classed as internal or external, which are a combination of both and the reasons for these differences.
We'll start by looking at the three main headings; Social, Economic and Environmental.
External: The Economy
In a bad economy, even a well-run business may not be able to survive. If customers lose their jobs or take jobs that can barely support them.
Spending less on sports, gifts, luxury goods and new cars
You can't control the economy, but understanding it can help you spot threats and opportunities.
External: Competition from other Businesses
Unless your company is unique, you'll have to deal with competition. When you start your company, you fight against established, more experienced businesses in the same industry. After you establish
yourself, you'll eventually have to face newer firms that try to slice away your customers.
Internal: Money and Resources
Lack of money can determine whether your company survives or dies. When cash resources are limited it affects; the number of people you can hire; the quality of your equipment; and the amount
of advertising you can do.
A more cash rich business has a lot more flexibility to grow and expand or endure an economic downturn.
External: Politics and Government Policy
Changes in government policy can have a huge effect on your business. The tobacco industry is a classic example. Since the 1950s, cigarette companies have been required to place warning labels on
their products, and they lost the right to advertise on television. Smokers have fewer and fewer places they can smoke legally.
The percentage of Americans who smoke has dropped by more than half, with a corresponding effect on industry revenues.
External: Customers and Suppliers
Next to your employees, your customers and suppliers may be the most important people you deal with. Suppliers have a huge impact on your costs. The ammount that can be charged for a material or
service from any given supplier depends on availabiliity.
If you can't buy anywhere else, your negotiating power is limited.
The power of your customers depends on; how fierce the competition for their money is; how good your products are and whether your advertising makes customers want to buy from your business.