Social and Cultural Environment

The social factors that affect a firm include the values, attitudes beliefs, opinions and lifestyles of person’s in the firm’s external environment as developed from demographic cultural, religious, educational and ethnic conditioning. Like other forces in the external environment social factors change continually . As social attitudes, beliefs and values change, so does the demand for various types of dresses, books, leisure activities etc. Let’s examine these factors in greater detail.

Demographic Factors:

Demographic characteristics such as population, age, distribution, religious composition, literacy levels, inter state migration, rural urban mobility, income distribution, etc. influence a firm’s strategic plans significantly . The entry of women into the labor market has, in recent times affected the hiring and compensation policies of their employers. This has also expanded the market for a wide range of products and services necessitated by their absence from their homes (such as convenience foods, microwave ovens, day care centers etc). The shifts in age distribution caused by improved birth control methods have literally compelled producers to go after youth oriented goods (beauty products , hair, and skin care preparations fitness equipment etc). The growing number of senior citizens has made many a government to pay more attention to tax exemptions, social security benefits etc. Another important concern is the desire for a better quality of work life. Employees expect more from organizations than simply a pay cheque. They want cleaner air and water as well as more leisure time to enjoy life more fully.

Labor mobility across different occupations and regions in recent times has cut down wage differentials greatly. If labor is heterogeneous as is the case in India, managing people becomes a tough and demanding task. The Explosive population growth during the last decade has serious implications for the Indian government which is wanting to go after sophisticated technologies and discarding the traditional.

Labor intensive methods:
The presence of a large number of English speaking engineers, at the same time, has encouraged many software giants to set up shop in India. Cheap labor, rise in income levels, favorable governmental initiatives have made the Indian market more attractive to multinationals in recent times.

Cultural factors:

Social attitudes values, customs, beliefs, rituals and practices also influence business practices in a major way. Christmas offers great financial opportunities for card companies, toy retailers, tree growers, mail order catalogue firms and other related businesses. Social values refer to abstract thinking about what is good, right and desirable. Beliefs on the other hand reflect the characteristics of physical and social phenomena. We may believe for example that a high fat diet causes cancer or that chocolate causes acne. Beliefs are important (whether right or wrong) in that they affect how we may behave and what we buy. For example, McDonald’s does not serve the beef burgers in India because Indians consider the cow as a sacred animal (Hindu traditions prohibit the consumption of beef in any form). Values and beliefs vary from culture to culture and before going ahead in a big way, companies must study the socio-cultural environment of a country thoroughly to avoid costly mistakes. To market soup in Japan the manager / marketer must realize that soup is regarded as a breakfast drink in Japan rather than as a dish served with lunch or dinner. The loyalty shown by Japanese workers towards their employees to take another example is far greater than that shown by Indian workers for their employers The distinction obviously can be traced back to their respective socio-cultural.

Most Indians still believe in work, in getting married, in offering prayers to God daily, in giving to charity and in being honest .These core values are passed on from parents to children and are reinforced by major social institutions such as schools, temples, churches, government etc. Increasing pressure from social activists has forced the government to ban cow slaughter in India. Rural women likewise joined hands in getting certain evil habits (drinking, gutka, drugs) rooted out of villages and educational institutions. Marketers should respect the core values of a society and respond in an appropriate manner.

Source: Strategic Management