SOCIO-CULTURAL FACTORS Sociocultural factors are those which include the social and cultural en vironment and attitudes

of a society. These factors would include societ al trends, such the lifestyle of families and how often they eat out. It also includes how different demographic segments act. Sociocultural f actors can affect the attitudes people have towards a product or servi ce, resulting in trend shifts in consumers buying habits. The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the bu siness. Sociological factors such as costs structure, customs and conven tions, cultural heritage, view toward wealth and income and scientific methods, respect for seniority, mobility of labour etc. have far-reaching impact on the business. These factors determines the work culture and mobility of labo ur, work groups etc. Socio-cultural factors that are present in the country should be given critical consideration by top management because these influence both the firms external environment as well as its internal system. Firms are constantly interacting with the cultural environment. They affect e ach other. In the United States, the large corporations shape the attitudes and the value systems of the communities. These attitudes and values, in turn, play upon the motivation, behavior and performance of both peopl e dealing with the firms and those working in the firms. When a firms top management institutes its own elaborate training progr am and creates an atmosphere for the exercise of authority, responsibi lity, initiative, risk, etc., the culture- the value system of the peo ple working for the company undergoes a change. The company in itself becomes a cultural subsystem. In fact, it can even become much more efficient than the surrounding firms and the surrounding society. These are limits, of course, to the extent of cultural change that c an take place within a firm. After all, employees must continue to i nteract with more dominant cultural system once they step out of thei r work premises and shed off their working roles. But change can be achieved, and the effect can be significant. ECONOMIC FACTORS Economic environment refers to the aggregate of the nature of economi c system of the country, the structural anatomy of the economy to eco nomic policies of the government the organisation of the capital marke t, the nature of factor endowment, business cycles, socio-economic inf rastructure etc. The successful businessman visualizes the external facto rs affecting the business, anticipating the prospective market situations and makes suitable to get the maximum with minimize cost. These include interest rates, taxation changes, economic growth, inflation and exchange rates. For example: higher interest rates may deter investm ent because it costs more to borrow a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency inflat ion may provoke higher wage demands from employees and raise costs higher nationa l income growth may boost demand for a firm s products The size of the market is inevitably a critical factor. These relates to present products, as well as to other products and services into which the firm might diversify. Competition is multi-faceted. The existence and potential growth of com petitors are economic factors which are of primary importance in devel oping a firms strategy. Social dimensions or environment Sociocultural factors are those which include the social and cultural environmen t and attitudes of a society. These factors would include societal trends, such

the lifestyle of families and how often they eat out. It also includes how diffe rent demographic segments act. Sociocultural factors can affect the attitudes pe ople have towards a product or service, resulting in trend shifts in consumers bu ying habits. The social dimension or environment of a nation determines the valu e system of the society which, in turn affects the functioning of the business. Sociological factors such as costs structure, customs and conventions, cultural heritage, view toward wealth and income and scientific methods, respect for seni ority, mobility of labour etc. have far-reaching impact on the business. These f actors determines the work culture and mobility of labour, work groups etc. For instance, the nature of goods and services to be produced depends upon the deman d of the people which in turn is affected by their attitudes, customs, so as cul tural values fashion etc. Socio-cultural environment determines the code of cond uct the business should follow. The social groups such as trade unions or consum er forum will intervene if the business follows the unethical practices. For ins tance, if the firm is not paying fair wages to its business in indulging in blac k marketing or adulteration, consumers forums and various government agencies wi ll take action against the business. Social factors. Changes in social trends can impact on the demand for a firm s p roducts and the availability and willingness of individuals to work Political environment The political environment of a country is influenced by the political organizati ons such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc. politic al stability in the country, foreign policy, Defense and military policy, image of the country and its leaders in and outside the country. The political environ ment of the country influences the business to a great extent. For instance, the Government of India, bottling and sale of Coca-Cola was discontinued in India i n the late seventies following policy of restricting the growth of multinational s in Indian markets. But, its entry was allowed under the New Industrial policy of 1991. Under this new policy, government allowed liberalized licensing, import s and exports, inflow of foreign capital and technology on more liberal terms. T he trends towards globalization and signing of GATT in 1993 have posed new chall enges before Indian business.