Socio – Cultural Factors And Its Impact On Business

BY - Divya.S.NRoll - 44MBA 2nd Sem,PESIT

Now, what exactly is Socio-Cultural Factors ?

• The external environment of the business in which social or cultural changes (that is, changes to the value system of a society) act to affect the business efforts.

• The changing socio-cultural factors may pose threats or present opportunities for the business.

SOCIETY Society or human society is the set of relations among people,

including their social status and roles.

A society is a body of individuals outlined by the bounds of functional interdependence, possibly comprising characteristics such as national or cultural identity, social solidarity, language or hierarchical organization.

Modern Conservative Orthodox

CULTURE• According to Hofstede, “ Culture is

the software of the mind- the social programming that runs the way we think, act and perceive ourselves and others.”

• Culture is defined as a complex whole which consists of customs, attitudes, beliefs and values of a society. The set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group.

• It is the total way of life of people.

Important socio-cultural factorsSocietie

s

Culture

MAQ

Preferences

Employment

Impact on BusinessWorkforce Diversity

• When people from different cultures converge in a workplace, Management will be required to manage diversity.

• Workforce diversity has important implications for Management practices.

• Managers will be required to shift their philosophy from treating everyone alike to recognizing differences and responding to those differences in manners that will ensure employee retention and productivity.

Religion and Religious GroupsReligious beliefs, convictions, customs, rituals and festivals differ from one

group to another.

Business firms can suffer heavy losses by ignoring religious sentiments of customers, employees and others.

Religious groups exert considerable influence on activities of business groups.

Thus, business must recognize and respect religious sentiments.

Example: Negative demand for beef products in India.

Customs & Superstitions

Many important business decisions in India are taken on the advise of astrologers. (Location of business, time of launch, name of enterprise, brand name etc.)

Example, Business firms do brisk business on festivals such as Dewali, Christmas, Id, Guru Purab etc.

No purchase of Iron & Steel goods by people on Saturday as it is considered inauspicious. Barber Shops & Chicken Shops don’t open on Tuesday due to religious reasons. (Lord Hanuman’s Day)

In most countries Sunday is a weekly holiday, but in Islamic countries Friday is treated as a weekly holiday.

Even acceptable colors depend on the culture sometimes.

Kellogg’s Failure in IndiaReasons for Failure:• The fact that the taste of its products did not suit Indian breakfast habits.

• The second mistake it made in the Indian market was its positioning front. Its advertisements and promotions focused initially on the health aspects of the product which was a fundamental departure from the successful ‘fun and taste’ positioning adopted in the United States.

• High prices: At an average cost of Rs.21 per 100gm,Kellogg products were clearly priced way above the product of its main competitor , Mohun Cornflakes (Rs16.50 for 100gm).Another small-time brand, Champion was selling at prices almost half that of Kellogg’s. This gave Kellogg a premium image and unattainable for the average Indian consumer.

Initial Failure of KFC in India

Reasons for Failure:

• KFC was banned in India in 1997 due to launching of Beef’s products in India.

• Beef products in India are totally unacceptable by the people of India as Cow is a Holy Animal in Hindu Culture and it is worshipped.

• So, it hurt the religious sentiments of all the Hindu people in India and was subsequently banned by the

• Government.

Petty Stores to Swanky MallsEarlier people used to go to Neighborhood Shops, but now due

to changing culture of working people, these shops have given way to Swanky Malls like Big Bazaar, Pantaloons, Trent, Westlife etc.

The people have become more brand conscious. Nowadays, people prefer more branded products over the local products even if they are more expensive.

From Scooter to Nano

Nano - People's carThe Dream of people to own a Car turned into true by Ratan Tata when he launched

Nano. The idea was based on the personal experience of Ratan Tata when he saw two-wheelers - with the father driving, the elder child standing in front and the wife behind holding a baby.

The price of Rs. 1,00,000 was fixed keeping in mind the low budget of an average Indian family and subsequently, it was the World’s cheapest car.

This triggered the revolution in the small car market.

No Health Awareness to Health Conscious PeopleNow, people are more conscious about the calories in a particular product and

always check the nutritional values before purchasing any product.

The business has responded to this situation by launching more health conscious products.

For e.g. Cold drinks like Pepsi and Coca Cola etc have given way to more healthier drinks like fresh fruit juice like Real And Tropicana etc.

Awareness regarding fitness in the people has made aerobics, going to gym and weight loss programs a craze among Indians.

For e.g. VLCC has been doing a brisk business.

Conclusion

• Understand the unique features of the target country – national/ethnic/organizational/ professional

• Map cultural differences and similarities between source and target cultures

• Top management should facilitate and address culture shock

• Get outside help if needed

THANK YOU