Businesses must operate where a society is. Even the large organizations, are mini-societies unto themselves. Here is an explanation 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 consists of the sum total of a society’s beliefs, customs, practices, and behaviors. Every society constructs its own social environment. Some of the customs, beliefs, practices, and behaviors are similar across cultures, and some are not. There is an easy example, an American traveling to Britain will find many familiar practices but not so much if traveling to China.
This social environment created by a society-at-large in which business functions can be referred to as its external social environment. The social external social environment is even more complicated when a business operates in a multicultural society because the environment will consist of diverse sub-populations with their own unique values, beliefs, and customs.
A business also has its own social environment, which we can call it, its internal social environment, which is simply the customs, beliefs, practices, and behaviors within the confines of the business. It is a known fact that a business has much more control over its internal social environment than it does with its external social environment.
How social factors affect business
Thinking or talking about the social aspects, you focus on the societal forces. Friends, neighbors, family, colleagues or even the media could be those forces and they 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 behavior, even our attitudes towards what we buy, are all affected by these. Here is a good example. The attitude of people in the UK is changing toward diet and health. According to this shifting behavior, businesses that have invested in fitness and organic food have seen a massive growth.
Often, products make the best of the social factors. For instance, the Wii Fit attempts to deal with the society’s concern about lack of exercise in children, which is, in essence, a good example of how social environment factors affect 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. Therefore, a decline in birth rates would mean that the demand will increase thereby indicating a high level of competition as the total consumers go down.
As another example, the prediction of food shortage would lead to a call for huge investment in the production of food. Some African nations who are facing food shortage like Uganda are reconsidering rejection of genetically modified foods.
It is necessary that the services and products offered by business organizations should be tailor-made to suit consumer’s lifestyles and compliment their behavior. The lack or slow reaction to changes in the society could be a costly affair for any business, for example, loss of market shares to quick reactors.
Back at You
Have social factors affected your business? If so, is that a positive or negative effect? Leave your responses down below!