Influences Of External and Internal Environment Against Competitive Advantage In Small and Medium Industries in Bandung, West Java. IKM entrepreneurs need to make the understanding of the external environment. The existence of dynamic change and competition in an industry can find opportunities that are adjusted to the capabilities of the company. Besides analyzing the external environment can help the entrepreneurs determine the needs and desires of the market. Instead internal environment analysis shows what should be done by the company. The purpose of this study is to analyze and determine the influence of external and internal environment on competitive advantage. The method used is a survey method, descriptive and explanatory survey. The number of respondents in this study were 140 IKM entrepreneurs in Bandung, West Java, which is determined by the sampling technique that is proportional cluster random sampling. To test the hypothesis of the study used statistical multivariate testing tool Partial Least Square (PLS). As for the use of data processing programs and SPSS version 2.0 smart PLS window. The results showed the external environment and internal environment affects the competitive advantage of IKM simultaneously. DOI: 10.15408/ess.v5i1.2330