Organizations are groups of people working together for a common purpose. They are created to produce products and/or services for customers using their resources. The internal environment includes the factors that affect its performance from within. They are called internal factors because they are within the organization’s control, as opposed to external factors, which are outside the organization’s control.

The late guru Peter Drucker said that, organizations need a clear purpose. What is the ultimate shared purpose? The organization’s mission is its purpose or reason for being. It states why the firm exists and what greater good it serves. What do you do? “Here’s who we are, here’s what we do,” and here’s how we differ from our competitors.

The mission is an expression of the ends the organization strives to attain. The other internal environmental factors are considered the means to achieve the ends. Top-level managers are responsible for the organization’s performance as they develop the visionary mission, strategies, and plans to achieve success.

Organizational culture consists of the values, beliefs, and assumptions about behavior that members of an organization share. The culture has to be based on the mission, because firms need the right culture to achieve their mission. Organizational resources include human, financial, physical, and informational. Human resources (capital) is the most important, because people develop and achieve the organization’s mission and objectives through the other three resources.