Social ,cultural and Demographic

Environment of Business
 STEP analysis
Organisations do not operate in a vacuum. They need to
look outwards at the following factors:
• Socio-cultural.
• Technological.
• Economic and competitive.
• Political and legal.
Elements of the external environment
 Socio-Cultural Environment

Social and Cultural environment refers to the

influence exercised by certain social factors which

are ‘beyond the company’s gate.’ Such factors
include, among others, attitude of people to work,
attitude to wealth, family, marriage, religion,
education, ethics and social responsibility of
business.
Business and Culture

Culture consists of both material culture and non-

material culture. Material culture involves man-made
things (e.g., automobile, television, telephone, etc.)
and man-made alternations in the environment. Non-
material culture includes such factors as language,
ideals, beliefs, values, music, etc.
Socio-cultural influences
Elements of Culture
Knowledge and Beliefs
Ideals
Preferences
LEVELS OF CULTURE: Four levels
National Culture: National culture is the dominant

culture within the political boundaries of a country.

Business Culture: Business culture guides everyday

business transaction.
Organisational Culture: It refers to the philosophies,

ideologies, values, assumptions, beliefs, expectations,

and norms that knit an organisation together and are
shared by its employees.
Occupational Culture: Different Occupational

groups such as physicians, lawyers, accountants,

professors, and crafts people have distinct
cultures- called Occupational cultures.
Organization of Culture
The term organization of culture refers to the social
structure and the integration of traits, complexes and
patterns that make up the cultural system.
Cultural Adaptation
 The term cultural adaptation refers to the manner in which a social
system or an individual fits into the physical or social environment.
The social system may be a small group, such as the family or a larger
collectivity, such as an organisation, or even a total society, like a
tribal society.
Cultural Shock

 Environmental changes sometimes produce culture shock – a feeling

of confusion, insecurity, and anxiety caused by the strangeness of the
new environment.
Cultural Transmission

 A very important character of culture is its transmissive quality. The

elements of culture are transmitted among the members of the
culture, from one generation to the next, and to the new members
admitted into the culture. Some of the aspects of a culture may be
transmitted to other cultures also.
Cultural Conformity
 Individuals in a culture tend either to conform to the cultural norms
or to deviate from them. If the culture endures as it is, most people
would conform to the norms.
Cultural Traits
 Low-Context and High-Context Cultures-
 Masculine and Feminine Cultures
 Monochronic and Polychronic Societies
 Universalism vs. Particularism
 Individualism vs. Communitarianism
 Neutral vs. Emotional
 Specific vs. Diffuse
 Achievement Vs. Ascription
Low-Context and High-Context
Cultures-
High -Context culture is one that places great
value on the intangible aspects of
negotiation. Individuals from such culture
look beyond the fact and figures and give
importance to factors such as personal
relationships , atmosphere, respect etc and
Low-Context Cultures- is one that places great
value on the tangible aspects of negotiation
such as facts, figures etc
Masculine and Feminine Cultures
Masculine Cultures appreciates
aggressiveness and assertiveness whereas
Feminine Cultures appreciates inter personal
relationship, quality of life etc before
business
Monochronic and Polychronic
Societies
Monochronic and Polychronic Societies
Monochronic Societies are which set
priorities and does one thing at a time.
Polychronic Societies uses time to do diverse
things at a time
Universalism vs. Particularism
Universalism vs. Particularism
In Universalism focus is more on rules than
on relationships
Individualism vs.
Communitarianism
Individualism vs. Communitarianism
Individualism-people from Individualism are
quick to make decisions and commit their
organizations to these decisions.
Neutral vs. Emotional
Neutral vs. Emotional
Japan and UK are highly neutral societies.
People try not to show their feelings and
maintain their composure
People in emotional culture smile a lot ,greet
each other with lot of enthusiasm,talk loudly
etc.
Specific vs. Diffuse
Specific vs. Diffuse
In Specific culture individuals have large public space
where they readily let others enter and a small
private space they guard closely and share with only
family and friends. Austria,UK ,USA are all specific
culture A diffuse culture is one where both public and
private space are similar inn size and individuals
guard their public space as entry into public space
affords entry in private space. China,Spain are all
diffuse culture.
Achievement Vs. Ascription

An Achievement culture is one where people are

accorded status based on how well they perform their
functions. An ascription culture is one in which
status is accorded on the basis of who or what a
person is .
So when individuals from Achievement culture does
business with ascription culture they should make
sure that their group has older, senior and formal
position holders. Alternatively when individuals from
ascription culture does business with Achievement
culture their group should have sufficient data and
knowledgeable people.
Religion
 Different peoples have their own religious convictions, beliefs,
sentiments, customs, rituals, festivals etc. The cost of ignoring certain
religious aspects could be very high, sometimes even fatal, in
business.
Ethnodomination
 In many countries one or other industry or trade is dominated by
certain ethnic groups. This is particularly true of trade.
 There are a number of cases of ethnodomination in India. For
example, the automobile spare parts business is dominated by the
Sikhs. There is domination of some communities in the wholesale
trade in several products. In several parts of the country, there is
dominance of some or other community in banking and money
lending like the Chettiars in Tamil Nadu and Vysyas in Karnataka and
other places.
Language
 Differences in the language is a very important problem area in
business.
 India has numerous languages and their dialects, besides the 18
officially recognised languages. Of the 1652 mother tongues listed by
the Census of India, 33 are spoken by people numbering a lakh or
more.
Other Social/Cultural Factors

 Consumer Preferences, Habits and Beliefs

 Etiquettes
Technological Developments and
Social Change

 Technology is one of the important determinants of social change.

“The rapid changes in our society are obviously related to, and
somehow dependent upon, the development of new techniques, new
inventions, new modes of production, new standards of living.”
Major Concepts in the Comparative Analysis of US and Japanese
Management
Management How Perceived in the How Perceived in
Concepts United States Japan
Company Team in sport Family in village
Business goal To win To survive
Employees Players in a team Children in a family
Human relations Functional Emotional
Competition Cut-throat Cooperation or sin
Profit motivation By all means Means to an end
Sense of identification Job pride Group prestige
Work motivation Individual income Group atmosphere
Production Productivity Training and diligence
Personnel Efficiency Maintenance
Promotion According to abilities Length of service
Pay Service and results Award for patience and
sacrifice
Major Concepts in the Comparative Analysis of Japan and India
Social/Cultural Japan India
Factors
Principles of Emphasis on government by the Prevalence of impersonal bureaucratic social
government/ virtuous and abrogation of coercion, relations, mistrust of fellow beings based on
administration mutual trust between employer and the assumption of human nature as evil.
employee and acceptance of basic Results in highly centralised administration,
goodness of human nature. Results overemphasis of hierarchial status in
decision-
in minimum control from above, high making, bureaucratic delays, low levels of
level of delegation, highly motivated delegation, dissatisfied workforce, and
workforce accentuation of apathy in individuals and
groups
Attitude towards Highly result-oriented General and deep-seated apathy,
work and goals and directed towards dissociation of work from its results based on
perfection and growth the belief that the results are pre-ordained.
Tasks
through dedicated effort are performed without any interest, dedication
or pride
Discipline and Highly disciplined, respect Lack of discipline at all levels, basic
order for superiors and respect mistrust of authority, poor superior-
for authority subordinate relationships
Group harmony Very high based on Assumption of inequality of human beings,
informal affiliative nagging suspicion of fellow beings and
pattern of behaviour and highly self-centered behaviour resulting
in a lack of cooperation and teamwork
Emphasis on Very high Generally indifferent and
education highly ambivalent
Important demographic bases of market
segmentation include the following.
 Age structure
 Gender
 Income distribution
 Family size
 Family life cycle (For example: Young, single: young, married, no children;
young married with children …….)
 Occupation
 Education
 Social class
 Religion
 Race
 Nationality
HUMAN RESOURCE
ISSUES
Population
 Growing population – determined by the birth rate, the death
rate, and the level of immigration
 Changing population – more than 80% of Americans can be
racially classified as white
Baby boom – high birth rates in 1945-1965
 Baby bust – the low birth rate period that followed the boomer
period (shortage of young workers called “busters”)
 Moving population – 1 out of every 5 Americans change their
address each year