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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.
This article is about the general case. For externalization of cost, in the context of economics, see externality. Externalization means to put something outside its original borders, especially to put a human function outside the human body. The opposite of externalization is internalization. In a concrete sense, by taking notes, we can externalize the function of memory which normally belongs in the brain.