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Socio-cultural environment

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shubham vora

on 18 October 2013

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Transcript of Socio-cultural environment

What is socio-cultural environment?

How Does Socio-cultural Environment Impact a Business?

McDonald's, one of the largest restaurant chains in the world, started its India operations in 1996.

The prime reason why many people didn't give McDonald's a chance in India was because most of the McDonald's restaurants around the world served beef in their burgers.

India, with its Hindu majority population, considers cow as sacred, and vegetarianism is taken so seriously that many vegetarians avoid sitting with someone having a non-vegetarian meal.

To succeed in a country where frugality was an inherent characteristic, McDonald's also had to work towards keeping the price of its products under check, without compromising on the hygiene and quality factors.

To succeed in such a behemoth and diverse market, McDonald's had to pay attention to all these socio-cultural factors.

Socio-cultural environment
Social and cultural environment refers to the influence exercised by certain social factors which are “beyond the company’s gate”. All such factors comes under one head that is culture.
Business in socio-cultural setting




Socio-Culture : In its narrow sense culture is understood to refer to such activities as :

In its true sense culture
is understood as that complex whole which includes :
customs other capabilities and habits acquired by individual as a member of a society.

Social and cultural environment has a profound effect on the policies and strategies of a business.
E.g. :Australia's largest airline Qantas, got into an alliance with Dubai-based airline Emirates. To respect the sensibilities of its alliance partner, and the Muslim population, pork and alcohol was banned from all flights to/from Europe.
The aim of a business is to make optimum use of its available resources to generate revenue, and maximize its profits. Whether or not a business is able to make optimum use of its available resources depends upon numerous internal and external factors. One of such notable factors that plays a decisive role in the functioning of an organization is the socio-cultural environment of the region in which the organization is operating.
Socio-cultural factors such as social attitudes, belief systems, education, law, politics, etc., have a bearing on the prospects of a business.
If a business overlooks, or fails to identify the effects of socio-cultural factors, it runs the risk of alienating itself with its immediate environment.
Religion and custom are two of the most important factors impacting a business. Every organization has to adapt itself to the prevalent customs and traditions in a region. A uniform business policy cannot be implemented throughout the world, as allowances need to be made for the religious sensibilities of the local population. Let us understand the concept in detail with the help of an example.
Religion and Custom
Change in Preferences
One of the most important socio-cultural trends which has an impact on a business is the constantly changing preferences of customers. A business may build a brand name for itself and model its core strategies in a certain manner, but if it fails to recognize and adapt to the changing preferences of the customers, it is doomed to fail. The example given below will analyze this in detail . e.g. NOKIA
Nokia was one of the biggest mobile handset manufacturers until recently.

The launch of iPhone, was a clear indicator to all handset manufacturers that customers expected quality experience while browsing the internet, listening to songs, watching videos, etc. the customers were appreciative of innovation and technology, and didn't mind paying extra to get the best thing in the market.
The hysteria surrounding the iPhone made Samsung sit up and take notice Samsung forayed into Android, a Google operating system, which was at a nascent stage at that time.

Although Nokia ditched Symbian and embracing Windows operating system, it was too late as the damage had already been done. The company lost its position as the leader of handset manufacturers, its sales and profits fell

Change in Demographics
Demographics is another socio-cultural factor that has an impact on the fortunes of a business. The number of people living in a region, their ethnicity, age, gender, race, gender, etc., are important factors to consider for any business organization. An understanding of the demographics of the customer base can provide a business with invaluable pointers towards launching new products, pricing, marketing strategies, etc. The following example will illustrate how demographics lead to a change in strategy.
E.g. :Australia's largest airline Qantas, got into an alliance with Dubai-based airline Emirates. To respect the sensibilities of its alliance partner, and the Muslim population, pork and alcohol was banned from all flights to/from Europe.


The importance of language differences cannot be overemphasized, as there are almost 3,000 languages in the world. Language differences cause many problems for marketers in designing advertising campaigns and product labels. Language problems become even more serious once the people of a country speak several languages. For example, in Canada, labels must be in both English and French. In India, there are over 200 different dialects, and a similar situation exists in China.


Colors have different meanings in different cultures.
For example, in Egypt, the country's national color of green is considered unacceptable for packaging, because religious leaders once wore it.
n Japan, black and white are colors of mourning and should not be used on a product's package. Similarly, purple is unacceptable in Hispanic nations because it is associated with death.

Customs and Taboos

All cultures have their own unique set of customs and taboos. It is important for marketers to learn about these customs and taboos so that they will know what is acceptable and what is not for their marketing programs

An individual's personal values arise from his/her moral or religious beliefs and are learned through experiences. For example, in America we place a very high value on material well-being, and are more likely to purchase status symbols than people in India. Additionally, Americans spend large amounts of money on soap, deodorant, and mouthwash because of the value placed on personal cleanliness.


Pepsodent toothpaste was unsuccessful in Southeast Asia

because it promised white teeth to a culture where black or yellow teeth are symbols of prestige
Workers union at Bajaj Auto's Chakan plant call off strike
Workers union at Bajaj Auto's Chakan plant has decided to call off the strike and resume work from Wednesday this week.

The workers union has been on strike since June 25th on demands varying from issuance of 500 shares, wage revision etc.
what was the problem..?
"Management was not responding the way we had expected to our demands. Also we dont want the company to lose out on production during the peak upcoming festive season. We will though continue with our demands, he added.

Rajiv Bajaj, MD of Bajaj Auto last week had given an ultimatum of 1 week for to his team to resolve the problem.
Listen up ! Brothers and sisters
If you wanna start a business it's not just a chiller
You gotta take care of the dogs and the people
The money and the lethal
Capitalism, socialism and communism ain't got nothing to with This business
It's social responsibility that puts us to the test
Yo! Hindu , Muslim Sikh isai we gotta stick together like bhai bhai bhai
And if you thats all we ain't done yet
Think about the festivals that will make you fret

It's a cruel world ! Yo!
But let's give it a go !
It's a cruel world! Yeah!
But let's make it out there
That's true !

So wake up you people and don't be cheap
Think about the poor customers who never sleep
Think about the goodwill that can be earned
In cash, in credit , in barrels and urns
But don't you ever ever forget
Its social responsibility that puts us to the test

Humans essentially create their own cultural and social environment. Customs, practices and traditions for survival and development are passed down from one generation to the next. In this way, the members of a particular society become conditioned to accept certain "truths" about life around them. The increasingly competitive international business environment calls upon exporters to tailor or adapt their business approach to the culture and traditions of specific foreign markets. The inability or unwillingness to do so could become a serious obstacle to success.
Differing Cultures
Culture varies around the world. What is acceptable in one nation might not be acceptable in another. This means that businesspeople have to be aware of how their culture differs from other cultures in order to establish good business relationships. For example, in some cultures, businesspeople might see bringing a gift to a business meeting as a gesture of good faith. In other cultures, this might appear like a bribe.

Businesses can stay in business only if there is a demand in a society for the product or service the company offers. Businesses determine whether demand exists through research. Market research is always social research, because a market is always a segment of the population.

No matter what industry you place your business, your business is responsible to society at some level. For example, it is good business practice to limit the emissions and waste your company produces so your consumers stay healthy. Likewise, society has a responsibility to provide businesses with accurate information and to enforce industry regulations.

Social Culture in Business
preferences of customers
Emerging business models(music)
In addition to these traditional business relationships, new ways of doing

business are being developed in the 21st century. The traditional lines that

once divided artist, publisher, record company, distributor, retail and consumer

electronics have become blurred. Artists may own their own publishing

companies, artist management companies may promote and market recordings

on behalf of their clients, artists may promote and market themselves using only

free services such as YouTube or social media, consumer electronics companies

have become digital music retailers, and so on, in many variations.
Total revenue by year

Global trade revenue according to the IFPI.

Year Revenue Change

2005 $20.7 billion -3%

2006 $19.6 billion -5%

2007 $18.8 billion -4%

2008 $18.4 billion -8%

2009 $17.4 billion -5%

2010 $16.8 billion -8.4%

2011 $16.2 billion -3%

2012 $16.5 billion +0.3%
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