Social and Cultural environment

The business operates within a social framework. Four aspects of this are relevant.

•    Power: - who has it how effective is it and how is it used.

•    Leadership:- who are the leaders and what are their weaknesses and strength.

•    Culture:- the value s and traditions within which the business must operate. One problem forcing multinational has often been failure to cope with the different cultural values of the countries within which they operate.

•    Risk:- attitudes towards risks and risk taking can be risk averse or seekers.

The organisation is influenced by changes in the nature, habits and attitudes of society: -

•    Changing values and lifestyles eg. flexible working hours, internet access and other IT devices that allow people to shop on line
•    Changing beliefs
•    Changing patterns of work and leisure
•    Demographic changes.
•    Changing mix in the ethnic and religious background of the population.

The social environment also covers the study of population trends. The manager will make use of such trend to determine the size, type and location of the market place for products or services.

•    Size: Expected growth or decline on the national and international population affects the markets size.

•    Type: Changes in the age distribution affects the product or services to be offered.

•    Location: The expected drift of population into different parts of the country affects the channels of distribution.

•    Demographic changes can have negative impact on demand. Falling birth rates could indicate problems ahead for producers and sellers of baby products later.

•    Emigrating population can reduce demand on a local basis.

•    Culturally changes in tastes and fashion can have a damaging effect on organisations that fail to anticipate the changes eg. clothing.