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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.
Now, to the internal versus external it is application dependent. Usually an external is used for plastic materials to spread the locking load and engagement cuts over a wider area. With the external one, the screw head has to be as large as the washer and that is not always desirable or possible.