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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.
An internal (inside) factor is something like how your staff performs where an outside factor is economic situations (i.e. dincrease in unemployement would imply that people are not spending as much money therefore your business could be suffering due to that) A very broad answer but thats the jist of it.