SOCIAL ENVIRONMENT
Businesses operate in a society thus their continuous interaction with the society is natural.
Businesses require the support from the society in terms of manpower, capital, facilities, etc.
while the businesses owe to fulfill their obligations back to the society as they have a social
purpose. This in-turn enables them fulfill their responsibility and obligations towards the society
as per their accepted levels of social commitment. This becomes an integral part of operating the
business for a businessman and thus the understanding of the social environment of business
becomes imperative.
Social environment is one of the elements of macro environment of the business. Social
environment comprises of social institutions, relationships, beliefs and social structure of the
society. In terms of business, social environment of an organisation includes the social values of
the workforce along with the society within which the organisation functions. It consists of all
the beliefs, customs and practices followed in the society. A business operating within the
parameters of a society has to deal with the distinctive values and customs which formulate the
factors of social environment affecting a business organisation. In case of a country like India,
with diverse cultural backgrounds, the social environment becomes more complex. The social
factors are usually influenced by family, friends, co-workers and even the social media.
Proliferation of social media influence in present day modern life has increased the perimeter of
social environment.
ELEMENTS OF SOCIAL ENVIRONMENT
Let us identify the various critical elements of social environment and the reciprocal relationship
between the business and the society.
• Social problems, prospects, social institutions and systems along with their social values
and attitudes.
• Education and culture and their impact on Social groups and activities.
• Socio-economic order and corresponding role and responsibilities of the Government.
Though the above list is suggestive, not exhaustive but it enables you to identify the sociocultural environment of business.
Let us now discuss the different elements of the social environment.
Attitudes and Beliefs
Attitudes are the perception which people have towards certain situations or commodities.
Attitudes are primarily formed on the values and beliefs of a person. Consumer attitudes towards
a product or service can influence the demand and supply of that particular product or service.
For example, favourable attitude towards a low sugar diet has led to increased demand for sugar
free products in the market. This shows that the attitudes and beliefs of people have an impact on
the social environment.
Social Class
Each society has a certain extent of social and economic inequality. Social inequality deals with
the discrimination based on caste in a society. The caste system in India resulted in social
differentiation and has created a difference in the number of opportunities available to people. In
other words, social class signified the social status of an individual. Consumer choices differ on
the basis of their social status. Another way of class distribution is based on the wealth and
income of the individuals and are divided into lower class, lower middle class, upper middle
class and upper class. The lower class is considered to have the least earning and upper class is
considered to have the most earnings amongst all. These income groups often coincide with the
social status of an individual. For instance, people belonging to higher income group usually
have a higher social status and vice versa.
Lifestyle
Adopted lifestyle is another element which affects the attitude and behavior of the people.
Lifestyle is fundamentally concerned with how the people live and spend their money. The
lifestyle pattern has changed in the recent times. People are opting for more simplified and
natural ways of life. The awareness towards sustainable practices has changed the way of life.
With the pandemic this practice has become all the more prevalent.
Preferences
Preferences are the personal taste of individuals about a product or service. These preferences
are directed by other social elements such as friends, neighbours, family, education and income.
The preferences change with time. This is correlated with the change in the income status
thereby the shift in the lifestyle of people. If we go back few decades back then TV was
considered to be a luxury and now it is considered to be a necessity. The preferences result in a
dynamic shift for a social environment.
Social Communities
Social communities include the circle of friends and co-workers. The need of social
belongingness compels an individual to adhere to practices followed amongst the community
members. In many cases people decide upon purchasing a product based on the reviews of
his/her social circle. The social community in which the individual lives has a great impact on
his/her decisions be it the buying behavior, lifestyle status, education, etc.
Social Institutions
Social institutions refer to social structures in a society under which an individual assumes
certain roles for the fulfillment of social needs. People under these social institutions are required
to follow certain norms and beliefs. There are five kinds of social institutions namely family,
economics, religion, education and government. They are referred to as primary institutions
which are further divided into secondary level institutions. Family gives rise to secondary
institution as marriage and divorce. Hierarchical structure of a family affects an individual’s
choice of goods and services. Further, secondary institutions of economics are property, trading,
credit banking, etc. The secondary institutions also consider temples, churches, mosques, etc. on
the basis of religion.
Education and Culture
Education and culture is another important element of social environment. You also would agree
to the statement that the percolation of education has gained foothold and this may be attributed
to the increasingly positive attitude towards education, especially from the rural areas. Age-old
education, made way to technical or skill based education and then to the structured business education. All were poised to increase the employment opportunities aiming at increased
manpower utilisation arising from a meaningful industry interaction.
Role of Government
Yet another important contributory element is the government and its role as ‘a welfare state’. It
is an ‘apex social institution’ and carries much importance in a democratic set-up where it is
assumed to be maintaining social order and harmony in the society. Business organisations and
Government play a complementary role. In pursuit of performance driven cultures, organisations
strive to bring in social cohesion. So terms like consumerism, trade unionism, the cooperative
movement, professional management, and shareholders’ associations, etc. become the associated
keywords for the social business environment.
CULTURAL ENVIRONMENT
Culture is a range of human actions which are socially transmittable. Culture can be explained as
a complex combination of morals, customs, law, art, beliefs, knowledge and habits acquired by
any individual member of a society. Culture is embedded in the way of life. In other words, Culture is a product of social interaction among humans and determines the human behavior.
Cultural environment is concerned with the culture within which the organisation operates and
includes the culture of its target market and the workforce.
ELEMENTS OF CULTURAL ENVIRONMENT
Cultural environment contains a number of important elements.
Knowledge and Beliefs
Knowledge and beliefs deal with the pre-existing concepts and philosophies possessed by an
individual about his or her surrounding reality. They consist of myths, philosophical thoughts,
abstract concepts as well as scientific facts. It is often witnessed that people belonging to a
specific culture have set beliefs about a particular thing apart from those permissible within that
culture and this may result in not accepting the other view point.
Religion
Religion is an important element of cultural environment. People belonging to different religions
have different religious principles, beliefs, thoughts, customs, rituals and traditions. A business
organisation should take into consideration every aspect of religious sentiments while marketing
their products.
Language
India has a vast number of languages and dialects out of which 22 are officially recognized
languages as per the Government of India. Apart from these officially recognized languages,
there are regional languages which are spoken within communities only. Variances in the
language can be a major concern for business organisation. Different words have different
meanings in different languages. This can be extremely crucial before deciding upon a brand
name in foreign country. Beyond words, non-verbal communications can also create issues for
an organisation. Body language such as gesture and posture has different meanings across
different cultures. A same symbol may have different interpretation in different nations or
different regions of a country. Verbal or non-verbal language, both have an impact on the overall
cultural environment.
Ethnicity
Ethnicity refers to the fact of belonging to a particular cultural tradition. An ethnic group’s
domination in an area can influence the decisions and strategies of the local businesses operating
in that area. Such domination can also influence the choice of trade opportunities. In case of international markets, ethnicity plays a bigger role. For example, Indian citizens belonging to
different cultures within the country belong to a single national ethnicity are referred to as
Indians.
Evaluation of Socio-Cultural Environment
Socio-cultural elements are one of the most important factors of the business environment which
can influence the managerial decision-making process and strategic goals of a business
organisation. Business organisations do not exist in a vacuum. Each and every firm in the
industry is surrounded by an environment. Changes in the factors of social and cultural
environment can have an effect on the commercial activities across the nations. In other words,
shifts in the social and cultural elements of the environment can lead to fluctuations in the
demand and supply of an economy. In order to survive in the market a business organisation
needs to adapt to the shifts of socio-cultural environment.
The earlier concept of business was limited to profit-making. However, in recent times business
is seen as a societal institution working for the betterment of society. Business organisations are
considered to be an integral part of the social systems. These businesses have the capacity to
influence the life styles of their consumers and the way society works.
Likewise, preferences and attitudes of the people can also influence the business strategies. For
example, rising health concerns amongst individuals has resulted in option for a healthy diet.
This has forced the organisations to be more cautious about the quality and choice of the
ingredients they use in their products. Change in income and education level leads to fluctuations
in demand for products and service. A rise in income level led to increased demand for high-end
products. For instance, people earning more generally prefer to buy more expensive range of
FMCG products as compared to low price brands.
Cultural dynamics also affects the functioning of the business organisations, internally as well as
externally. Culture affects many things in an organisation such as pace of business, decision –
making and negotiations, employee management, risk-taking capacity and sales and marketing.
Culture is responsible for developing trust amongst employer and employees as well as between
organisation and its consumers. For example, in India one of the Food and Beverages Company
has to customize its menu as per the customs and traditions of the consumers.
A prime example of effect of socio-cultural environment on business can be seen in the
promotional campaigns during festive seasons. The campaigns show families celebrating
festivals together as a part of their cultural traditions and how the product or service fit into their
traditions.
Current Scenario of Socio-Cultural Environment
Change in Fashion
Trends
Fashion trends changes every few years. What might be popular ten years ago might not be
popular today. Social media influence has rapidly increased the pace of changes in trends. Such
changes lead to shift in consumer preferences and attitudes. For instance, clothing brands has to
be aware of most recent fashion trends while launching new collection. Another example of this
can be change in advertising patterns. Television and print media were considered to be the most
popular method of promoting products in the past decade. However, with a rise in users of smart
phones and social networking sites, advertising through social media has been a new rage in the
field of marketing (Quain, 2019).
Social Issues
Socio-cultural elements not only impact the business strategies of an organisation but also affect
the internal policies of the organisation. Raising concern around gender issues has forced
organisations to incorporate equal policies and practices for male and female employees. For
instance, flexibility in gender roles among husband and wife has led to creation of policies for
paternity leave alongside maternity leave. Further, awareness about gender sensitivity has led to
change in attitudes towards workplace harassment and gender discrimination. Another instance
of such cultural changes is non-resistance towards racial discrimination at workplace (Quain,
2019).
Population
Rise in population in India has resulted in the constant need of urbanization. About one third of
the population in India lives in urban areas. India has seen a constant rise in the number of urban
population (O’Neill, 2021). Rapid growth in urbanization strengthened the need for urban
infrastructure such as transportation, hospitals, schools, sanitation facilities and power supply. A
major concern behind the rise in urbanization is migration of population due to industrialization.
Moreover, India has major portion of working-age population or young population. This
construct has created a labour class at cheap rates. Besides, this young population has created
demands for digitized economy. Urban working professional are more interested in digital
banking and saving options (UK Essays, 2018).
Multi-Diversity
In present times, a majority of the organisations have a mixed culture workforce, especially in
case of multinational organisation. India is a multi-diversity nation with mixed culture race. In
order to deal with people from different cultures one must be careful about their business
practices, communication style and management style as they might vary among different cultures. For targeting a consumer segment from other culture, an organisation must keep aside
preconceived notions and put in efforts to learn about them (Saylor Academy, 2012).
