Impact of Social and Cultural Factors on Business13/02/2020
Social and cultural factors affecting business include belief systems and practices, customs, traditions and behavior’s of all people in given country, fashion trends and market activities influencing actions and decisions. Socio-cultural perspective is one of the most important factor influencing decision of marketing managers and strategic goals of companies entering new foreign markets. It should be noted that legal factors affecting business is also considered as one of the major socio-cultural factors that can influence companies. Proper identification of this factor during strategic analysis (PEST analysis, STEEP analysis, SWOT analysis, TOWS analysis) could lead to better strategic alignment of company to society (during international development).
Your business doesn’t operate in a vacuum, especially if you do a lot of work overseas. This means societal and cultural changes can have an impact on your company based on how your target audience’s attitudes and moods shift over time. Socio-cultural factors can involve social attitudes, beliefs, education, legal structure and political ideology.
You don’t have to overhaul your company’s mission statement and values based on the whims of your audience. However, as society and culture change, your responsibility as a business owner or leader is to adapt and stay ahead of your competitors and remain relevant in the minds of your consumers.
Socio-Cultural factors influencing businesses
(i) Changing Preferences Require Adaptation
One of the major socio-cultural factors influencing businesses and business decisions is changing consumer preferences. What was popular and fashionable 20 years ago may not be popular today or 10 years down the road. Different styles and priorities can undermine long successful products and services. For example, a clothing company must constantly be aware of changing preferences when creating new products or it will quickly become outdated.
Another example is the marketing industry. Ten years ago, consumers wanted businesses to market their products and services on TV, radio and in newspapers. But after the introduction of the iPhone and the emergence of social media, consumer preferences changed. Audiences have now become more mobile, which means that to reach them, companies have had to develop mobile marketing strategies.
(ii) Changing Demographics Affect How You Target Your Audience
Changes in demographics are also a significant factor in the business world. As populations age, for example, markets for popular music and fashions may shrink while markets for luxury goods and health products may increase. Additionally, changes in the proportion of genders and different racial, religious and ethnic groups within a society may also have a significant impact on the way a company does business.
This is especially true when it comes to marketing products and services to a younger generation. For example, clothing styles are always changing, but the most significant change occurs in the demographics of prospective buyers. It used to be that business owners in the clothing industry could cast a wide net and reel in customers, but with audiences so segmented, understanding the growing power of Generation Z, for example, is vital. This audience is often categorized as buyers born in 1995 onwards, and they have emerged over the past five years as a motivated consumer group.
(iii) Gender and Racial Attitudes Impact Internal Work Environment
In addition to a company’s interactions with the market and its customers, socio-cultural factors also impact a company’s internal decision-making process. For example, changing gender roles and increasing emphasis on family life have led to increased respect for maternity and paternity leave with organizations. Additionally, attitudes toward racial discrimination and sexual harassment have changed drastically over the years as a result of a socio-cultural change.
More recently, sexual harassment has become an explosive issue, driven by the countless number of powerful corporate leaders that have run afoul of harassment charges. As a result, societal attitudes about how women should be treated in the workplace have dramatically shifted. In the past, an “old boys network” was tolerable if only because women didn’t feel empowered to push back against entrenched ideas about their work roles. But as women have begun speaking up and telling their stories regarding harassment, company leaders have taken note.
Social factors affecting business
- Social classes and their influence on the society,
- Average disposable income level,
- Wealth of people,
- Economic inequalities,
- Level of education,
- Access to education (free, paid),
- Level and access to health-care,
- Health consciousness in society (smoking, drinking, drug use, safe driving, etc.),
- Buying habits and consumer preferences,
- Average retirement age (for men and women),
- Personality of average consumer,
- Reputation of company in society,
- Conflicts within society,
- Susceptibility to influence,
- Social organization (communities, social groups, gangs, ad-hoc gatherings, etc.),
- Uncertainty avoidance dominating in society (or other G. Hofstede socio-cultural factors),
Cultural factors affecting business
- Fashion trends,
- Social media influence (blogging, etc.) vs traditional media (press, TV, radio),
- Dominant communication technology in social groups,
- Participation in cultural events,
- Willingness to pay for tickets,
- Popular actors, music styles, design forms, etc.
- Creativity of people,
- Relative population of local (folk) artists vs. global imported culture,
- Various other determinants of culture.