Socio – Cultural Factors And Its Impact On

Business

BY - Divya.S.N
Roll - 44
MBA 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
factors
Societie
s

Culture

MAQ

Prefere
nces

Employ
ment
 Impact on Business
Workforce 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 Groups
Religious 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 India
Reasons 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 Malls
Earlier 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 car
 The 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 People
Now, 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