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Internal means factors or components within a business that can be controlled and external is the exact opposite. External factors, economy, competitors etc... Internal means something done from the inside and external means the opposite, something done from the outside.
The internal environment is very much associated with the human resource of the business or organisation, and the manner in which people undertake work in accordance with the mission of the organisation. To some extent, the internal environment is controllable and changeable through planning and management processes. The external environment, on the other hand is not controllable. The managers of a business have no control over business competitors, or changes to law, or general economic conditions.