Final answer:
To analyze internal factors affecting business operations, one should examine production costs, inputs, and profitability, focusing on labor, materials, machinery, and the costs of land, labor, and capital, while taking into account simultaneous market changes.
Step-by-step explanation:
When conducting an analysis of the internal factors that affect business operation, several aspects should be considered, including production costs, inputs or factors of production, and potential profitability. These aspects encompass the costs of labor, materials, and machinery, which all play a crucial role in determining a firm's bottom line. Factors of production such as land, labor, and capital significantly influence the ability to generate profits. A comprehensive internal analysis examines these costs in relation to the revenue generated by the business, as profits are the key motivator for firms and a reflection of their financial health.
Economists and business analysts must also navigate through the complexity of multiple factors changing simultaneously in the market. This requires a thorough understanding of how each aspect of production and cost structures impact overall business operations and supply dynamics. Analysts perform industrial site location analysis, which is an integration of economic geography and cost analysis, to ensure optimal profitability when deciding on the placement of new factories or business expansions.