Social and Cultural environment Nature

Social environment

There is no doubt that society is continually changing. The tastes and fashions are a great example of this change. One of the most significant differences is the growing popularity of social media. Social networking sites like Facebook have become very popular among younger people. The young consumers have grown used to mobile phones and computers.

The younger generation prefers to use digital technology to shop online. Older people will perhaps stick to their traditional methods. The effect of changing society is often discussed. You must also understand that these changing factors have a toll on businesses too. Changes in social factors can impact a firm in many different ways.

Companies often focus on these changes in depth.  To do so, they employ environmental analysis such as PEST analysis. STEP is a variation of PEST. Extended versions include PESTLE, STEEP, and STEEPLE analysis. The “S” in all these analyses indicates social or socio-cultural factors. Other factors you should assess are political, economic, technological, environmental, ethical, and legal.

Businesses choose an environmental analysis depending on the nature of operations. However, all of them study the social factors.

In the social step for these analyses, you have to look carefully at the social changes. You will also have to look into the cultural changes which take place in your business environment. Market research is a critical part of this step. It is vital to see the trends and patterns of society.

To understand the impacts better, you might need to study the factors in detail. Most companies analyze population growth and age structure. They also show interest in consumer attitudes and lifestyle changes. Your analysis can show if there are faults in your marketing strategy. It can also help find new ideas.

Below is a list of social factors which impact customer needs and the size of markets:

  • Lifestyles
  • Buying habits
  • Education level
  • Emphasis on safety
  • Religion and beliefs
  • Health consciousness
  • Sex distribution
  • Average disposable income level
  • Social classes
  • Family size and structure
  • Minorities
  • Attitudes toward saving and investing
  • Attitudes toward green or ecological products
  • Attitudes toward renewable energy
  • Population growth rate
  • Immigration and emigration rates
  • Age distribution and life expectancy rates
  • Attitudes toward imported products and services
  • Attitudes toward work, career, leisure, and retirement
  • Attitudes toward customer service and product quality

The social aspect focuses on the forces within society. Family, friends, colleagues, neighbors, and the media are social factors. These factors can affect our attitudes, opinions, and interests. So, it can impact the sales of products and revenues earned.

The social factors shape who we are as people. It affects how we behave and what we buy. A good example is how people’s attitude towards diet and health is changing in the UK. Because of this, UK businesses are seeing some changes. More people are joining fitness clubs. There is also a massive growth in demand for organic food.

Products often take advantage of social factors. The Wii Fit, for instance, attempt to deal with society’s concern about children’s lack of exercise.

Population changes are also directly affecting organizations. The supply and demand of goods and services in an economy can change with the structure of the population. A decline in birth rates means demand will decrease. It also indicates greater competition as the total consumers fall.

World food shortage predictions can lead to call for more investment in food production. An increase in the world’s population can have the same effect. African countries like Uganda are facing food shortages. They are reconsidering the rejection of genetically modified foods now.

Organizations should be able to offer products and services which aim to benefit people’s lifestyle. The offerings should complement customers’ behavior. Not reacting to changes in society can be a costly mistake. They might lose market share. Demand for their products and services will fall.

Cultural environment

Even in today’s global world, there are wide cultural differences, and these differences influence how people do business. Culture impacts many things in business, including

  • The pace of business;
  • Business protocol how to physically and verbally meet and interact;
  • Decision making and negotiating;
  • Managing employees and projects;
  • Propensity for risk taking; and
  • Marketing, sales, and distribution.

There are still many people around the world who think that business is just about core business principles and making money. They assume that issues like culture don’t really matter. These issues do matter in many ways. Even though people are focused on the bottom line, people do business with people they like, trust, and understand. Culture determines all of these key issues.

The opening case shows how a simple issue, such as local flavor preferences, can impact a billion-dollar company. The influence of cultural factors on business is extensive. Culture impacts how employees are best managed based on their values and priorities. It also impacts the functional areas of marketing, sales, and distribution.

It can affect a company’s analysis and decision on how best to enter a new market. Do they prefer a partner (tending toward uncertainty avoidance) so they do not have to worry about local practices or government relations? Or are they willing to set up a wholly owned unit to recoup the best financial prospects?

When you’re dealing with people from another culture, you may find that their business practices, communication, and management styles are different from those to which you are accustomed. Understanding the culture of the people with whom you are dealing is important to successful business interactions and to accomplishing business objectives. For example, you’ll need to understand

  • How people communicate;
  • How culture impacts how people view time and deadlines;
  • How they are likely to ask questions or highlight problems;
  • How people respond to management and authority;
  • How people perceive verbal and physical communications; and
  • How people make decisions.

To conduct business with people from other cultures, you must put aside preconceived notions and strive to learn about the culture of your counterpart. Often the greatest challenge is learning not to apply your own value system when judging people from other cultures. It is important to remember that there are no right or wrong ways to deal with other people just different ways. Concepts like time and ethics are viewed differently from place to place, and the smart business professional will seek to understand the rationale underlying another culture’s concepts.

For younger and smaller companies, there’s no room for errors or delays both of which may result from cultural misunderstandings and miscommunications. These miscues can and often do impact the bottom line.

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