Factors Impacting Organizational Change – Internal & External 

According to an estimate, approximately 25% to 30% of businesses and companies go bankrupt and are kicked out of the market every 3 to 5 years. Businesses and companies that keep them updated and relevant to the changing environment, stay in the market. Today, we’ll discuss internal and external factors impacting organizational change.

Organizational Change 

Organizational change is the process of replacing and reorganizing the structure, technology, operation, system, and methods. You can say that it is a transformational, transitional, and developmental process. There are various internal and external factors that compel an organization towards change. Let’s various factors impacting organizational change;

Internal Factors Impacting Organizational Change 

Some of the key internal factors impacting organizational change are as follows;

Team Mates & Employees

The workforce and employees are a great asset to the company and they play a significant role in organizational development. If their skills and expertise align with the company’s goals and objectives, and the organization is providing them necessary training; then the organization would succeed in its change program.

Company’s Performance

The reason businesses and companies move towards implementing change is because they aren’t comfortable with the company’s performance. They bring revolutionary changes, allocate resources, and transform various roles and responsibilities is because to update the company’s performance at the industry level.


Sometimes, the company’s leadership is the main reason for the company’s downfall. It is because they lack vision and future foresight, and they’re sticking to the old methods of working that aren’t applicable in today’s modern workplace. The company’s leadership is the main internal factor that would make or break the company’s future.

Skills & Expertise

Skills and expertise are significant to the company’s change program. For instance, if the company’s core strength is technological innovation and creativity, then it would change the flow of the entire industry and culture with its innovative products and services.

Organizational Culture

Organizational culture plays a significant role in the company’s growth and productivity. For instance, if the company’s culture focuses on collaboration, innovation, and creativity, then it is highly probable that the company would achieve success in the implementation of its change program.


The main driving force towards change is the company’s core internal values. For instance, strong workplace ethics, gender empowerment, diversity, and others are some of the strong core internal values that would compel the organization to bring changes in its processes and methods.

Vision & Mission

Various brands and companies have got a strong commitment to their vision and mission statement. It means their objective of being in a particular line of business. However, every step they take is to streamline their products and services with their vision. Their vision and mission define them and they live up to the company’s vision statement.


The company’s structure is the chain of command that defines how the orders and strategies flow internally. If a company has a flexible structure that promotes collaboration, then it would make things flow smoothly inside the organization.


The company’s processes are the mechanism of how the company performs its daily routine operations. If the company’s internal processes are simple and easy, then the employees’ onboarding process would be easy and quick.

External Factors Impacting Organizational Change 

Some of the key external factors impacting organizational change are as follows;


There are various things that happen in society like migration, urbanization, educational shift, or new trends. They all are strong external forces and they compel the company to change its products and services relevant to the changing social trends and norms.


Companies run their business in the particular political environment of the country. For instance, strikes, roadblocks, protests, and boycotts would disturb the supply chain and distribution processes of the company.


Governments and legal institutions of different countries set labor laws, industry regulations, taxation, and trade policies for businesses and companies. They set a protocol on how companies should operate their businesses. Companies should be careful about the country’s regulations while implementing any type of strategy.


A country’s economy plays a significant role in the growth, ups, and downs of a country. Economic recession, high-interest rates, low purchasing power, and inflation rate are such external factors that would directly impact the business of a company.


Technology has reshaped everything about our lives and how businesses and companies should conduct their operations. For instance, digitalization, AI, IoT, and social media platforms were unknown to businesses and companies two decades ago, but they now become a significant element of companies.


The external industry competitive environment in which the company is operating its business becomes highly difficult. It is a strong compelling factor that pushes businesses and companies about what types of marketing strategies they would launch.

Fashion & Trends

For instance, the consumer market has become highly cautious about dietary food, healthy, and hygiene. It imposes great pressure on businesses and companies to keep up with the latest market trends and fashion. Sometimes, there is a fashion of loose fitting dress, and tight fitting fashion is the other time.


The external environment offers a lot of opportunities to businesses and organizations. Companies should pay close attention to the external environment; if any technological development offers an opportunity to the companies, they would exploit it to their advantage.


Businesses and companies have got no control over environmental factors like floods, pandemics, droughts, earthquakes, and others. Since companies have got no control over them, all they have to do is to make adjustments to the environmental changes.

Merger & Acquisition

Mergers and acquisitions bring new management, leadership, and regulations to the company. Sometimes, it is good and allows companies to enter into new markets; develop new products and services to amplify their portfolio.

Conclusion: Factors Impacting Organizational Change 

After an in-depth study of factors impacting organizational change; we have realized that companies need to adjust their strategies and actions relevant to the internal and external environment. If you are learning about internal and external factors, then you should keep in mind the abovementioned factors.

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