Question

In a discussion with a colleague the following statement is made to you: 'I was explainingdata

flow diagrams to our client this morning. It took a while but eventually they understood that

divisions of their organisation must be shown as internal entities, and other businesses or

customers must be shown as external entities.' Evaluate this statement and read relevant

course materials

Question:

Evaluate the extent to which your colleague is correct. Justify whether your colleague is

right or wrong by referring to the definition of internal and external entities. Use examples

to justify your answer.

Answer 1

Answer :-

If the colleague pertains to stakeholders in defining internal and external entities, he/she is correct. Stakeholders are anyone who is concerned with the business - its performance, the business activities. Stakeholders can affect or be affected by the organization's action,objectives and policies.Somme examples of Key stakeholders creditors,directors,employees,government,owners,suppliers,and the community from whichthe business draws it's resources

.

It is correct to consider the divisions of the organization as internal. They are affected directly by the company and have more influence on how the company should be managed. With this, it is incorrect to consider the customers as external they, too, are important because they create the demand which influences the company's sales.

.

Thus, it is wrong to classify a certain individual or group as internal or external based on whether they are located or can be found within the entity or not. On contrary, it should be based on their influence and how involved they are to the company.