How Social Factors Affect Business Environment

Businesses must operate where a society is. Actually, organizations, especially large ones, are mini-societies unto themselves. Here, we explain to you some of the factors that make up the external and internal social factors affecting business, and how they affect them.

Social Environment Definition

The social environment of a business consists of all that a society believes, its customs, its practices and it’s the way it behaves. Largely, it is an artificial construct that can be clearly contrasted with the natural environment in which we have our livelihoods.

Now, every society, as explained above, constructs its own social environment factors affecting their businesses. Of course some beliefs, customary practices and behaviours are similar across cultures while others aren’t. An American, for instance, travelling to Great Britain, finds many practices there familiar, but if he went to China, not so much. The nature of businesses there are based on Chinese factors of their social environments impacting their businesses.

When such an environment is created by a society where a business operates and functions, this is known as its external social environment. In another case, when a business operates in a society that is multicultural, the social external environment becomes even more complicated due to the environment consisting of diverse sub-populations, each with its own unique values and customs that make up social environment factors that affect business.

Businesses also have their own social environmental factors. This is also known as internal social environments. There is some level of control by a business over its internal social environments in relation to its external social environments, all of which are factors affecting businesses when it comes to their social environments. In simple terms, the beliefs, customs, practices and behaviours within the confines of the business.

You have to be very keen when looking at the social changes in the social step for this analyses. You cannot overlook the cultural changes that happen in the social environments of your business. This is where marketing research applies – very important in the ability to see the societies’ trends and patterns.

Social Factors

Social Factors Affecting Business Environment and Strategy

When you talk about the social aspects, you focus on the societal forces. So, these could be family, friends, neighbours, colleagues and even the media. All of these factors are able to affect our attitudes, our opinions and our interests, thereby directly impacting product sales and services by businesses and revenues earned.

We as people are shaped by these factors and our behaviour, even our attitudes towards what we buy, are all affected by these. Here is a good example. In the UK peoples’ attitude is changing toward diet and health. Due to this shifting behaviour, businesses that have invested in fitness and organic food have seen a massive growth.

Often, products make the best of the social factors. The Wii Fit, for instance, attempt to deal with the society’s concern about lack of exercise in children, which is, in essence, a good example of social environment factors affecting business as described at the beginning of the document.

Organizations are also directly affected by changes in population. The structure of the population determines the way the supply and demand of goods and services can change. So, the decline in birth rates would mean that the demand will increase thereby indicating high level of competition as the total consumers goes down.

As another example, the prediction of food shortage would lead to a call for huge investment in the production of food. African nations facing food shortage like Uganda are reconsidering rejection of genetically modified foods.

The products and services offered by business organizations should be tailor made to suit consumer’s lifestyles and compliment their behaviour, this is where social factor marketing is considered. Slow reaction or lack thereof, to changes in the society could be costly affair for any business, for example, loss of market shares to quick reactors.

Below are more examples of global companies using the analysis.

Examples How Social Factors Affect Business

Pepsi Company. Research has shown that social factors have greatly impacted the beverage company. Why? Perhaps because Pepsi is a non- alcoholic beverage. So, it has to maintain the sharp differences in cultures around the world.

It is of great importance that Pepsi Co communicates its image as a global brand so as to be able to change the way people perceive it. There is expectation that its buyers are able to think of the drink, Pepsi, as a unifying factor the world over. The implications will be implemented and seen in marketing campaigns.

For example, the religious festivals featured in TVC advertisements vary based on cultures and their social factors. Pepsi has to value and indulge in all the festivals and relate itself to the market.  Reacting towards social factor can help Pepsi Co to cash the opportunity.

Nokia. Long before Nokia was acquired by Microsoft, it operated mostly in the western markets. Nokia had to understand the social factors in western markets. The culture of the society was a great underlying issue. Buyers saw the brand as a fashion statement, and for that reason, Nokia had to make efforts to ensure their products were well updated. Because consumers are always in the quest to have the latest and best-looking smartphones, Nokia could not just ignore that fact.

Trends in smartphones meant buyers were more satisfied in having the latest released gadgets with the latest and best app, and upon such findings about such social factors, Nokia developed trendy new smartphones as a way of meeting the demand.