CONCEPT OF SOCIO-CULTURAL ENVIRONMENT

BBA- VII A/B Socio-cultural environment refers primarily to man created intangible
elements which affect people’s behavior, relationship, perception, way of
life, and their survival and existence. It consists of both the social system
UNIT and the culture of a people.

SOCIO-CULTURAL Socio-cultural environment: Society + Culture

ENVRIONMENT Social environment refers to the immediate physical and social setting in
which people live. It includes demographics (population size, age mix,
7 migration) and social structure (family, reference group, social class).

Cultural environment refers to learned, shared, and enduring orientation

of a society. It encompasses all sort of things- how people eat, dress,
work, think, and communicate in a society. Culture includes religion,
language, food, dress, aesthetics etc.

Therefore, socio-cultural environment is a set of religion, language, food,

CHAPTER
OUTLINE
 Concept of socio-cultural environment
 Significance of socio-cultural environment on
business
 Determinants of socio-cultural environment
 An analysis of how socio-cultural environment
affects the Nepalese business
 Emerging socio-cultural changes and trends in
Nepal
dress, aesthetics, beliefs, and behavior that exists within a society. These
elements are learned and are shared by a society and transmitted from
generation to generation within the society. Socio-cultural environment is
the way people lead their lives and controls the way of their thinking and
actions.
Socio-cultural environment consists of factors related to human
relationships and the impact of social attitudes and cultural values on the
business of the organization. Businesses do not exist in a vacuum, and
even the most successful business must be aware of changes in the
cultures and societies in which it does business. As society and culture
change, businesses must adapt to stay ahead of their competitors and stay
relevant in the minds of their consumers.

The socio-cultural environment of business can be categorized into:

 Internal socio-cultural environment: It refers to the customs, beliefs,
practices, and behaviors within an organization.

 External socio-cultural environment: It is the environment created by

a society-at-large in which a business functions.
SIGNIFICANCE OF SOCIO-CULTURAL ENVIRONMENT ON
BUSINESS Figure (7.1): Determinants of Socio-cultural environment
It is necessary to study the socio-cultural attributes of the people
where it intended to operate the business. Hence, it determines the Religion
society’s consumption pattern, taste and preference of the customers.
Determinants of Language
Socio-cultural forces remain in a state of flux and business adaptation is
socio-cultural
essential to meeting societies changing buying demands. Sometimes, environment Education
business often influence on social values in terms of food, dress, music
etc. Socio-cultural environment is significant on business for the Family structure
following reasons:
Social organization

1) Influences on internal socio-cultural environment of an

organization: Internal socio-cultural environment refers to the factors
such as customs, beliefs, practices, and behaviors within an
organization. However, these internal socio-cultural factors of an
organization are determined by external socio-cultural environment.
2) Influences on organizational structure: The organizational
structure is determined by socio-cultural environment in terms of
authority, responsibility, education etc. This ultimately affects the
organizational result in terms of recruitment process, turnover,
absenteeism, compensation, motivation etc.
3) Influences on marketing strategies: Socio-cultural environment
influences on every aspects of marketing strategies: product, price,
place, and promotion. The features of product such as design, colour,
style, quality are determined by socio-cultural environment.
Similarly, the price of product, place of availability, and languages to
be while promotion is also determined by socio-cultural environment.
4) Drivers of social change: Business firms also considered as the
drivers of social changes. They act as change agent and influence
consumption pattern, taste and preference of the customers. For
example, fast food chain KFC in Nepal have changed the food habits
of the Nepalese people such as burger, French fry, chicken wings etc.
DETERMINANTS OF SOCIO-CULTURAL ENVIRONMENT
Culture is created by society and is handed down from generation to
generation. The various determinants/components of socio-cultural
environment are:
1) Religion: Religion provides the best insight into a society's behaviour
and helps answer the question why people behave rather than how
they behave. Religion affects the way of life such as food habit, dress
up, purchase behavior, and communication. Religion influences on
business because it determine the holidays, demand of specific
products in particular period, bargaining power, attitude towards work
etc.
For example, Hindus generally do not buy assets during the ‘shraadh’
period whereas hectic buying is seen during Diwali, due to the
practice of gifting. Same is the case among Christians, across the
world. Christmas season witnesses huge upsurge in sales. The same
trend is seen among Muslims during Eid. Similarly, Weekly offs are
also often based on religious practices. While Sunday is observed as a
weekly off in many countries, it is Friday in the Islamic world.
Historically, certain religious beliefs have also determined work
ethics. The Protestant (in USA), Confucian (in certain Asian
countries), and Shinto (in Japan) believe in working hard and often
long hours.
In Nepal, following is the composition of the religion:
Table (7.1): Composition of religion in Nepal
Religion Percent of the total population
Hindu 81%
Buddhist 9%
Muslim 4.4%
Kirant 3.1%
Christian 1.4%
 Others 0.5% 3) Education: Education refers to the transmission of skills, ideas and
Unspecified 0.2% attitudes as well as training in particular disciplines. It can transmit
Source: National census, 2011 cultural ideas or be used for change.

2) Language: Language is the method of human communication, either The importance placed on education by a group of people that
spoken or written, consisting of the use of words in a structured and live in a particular area can determine the kind of business that
conventional way. There are almost 3,000 languages in the world. can thrive in that area. There are societies where the average
The spoken language of the nation/community is a decisive factor on people have only School level education, and also there are
the labeling and advertising of the products. Language differences societies where the average people have university level degree.
cause many problems for businessmen in designing advertising
The level of education of the people that live in the area where
campaigns and product labels.
businessmen intend establishing their business helps them with
Language problems become even more serious once the people of a the choice of business, advertising and marketing approach.
country speak several languages. For example, in Canada, labels must
be in both English and French. Similarly, in Washington D. C., Education levels, or lack of it, affect marketers in a number of ways:
different transportation companies use English and Spanish on their  Advertising programmes and labeling
brochures. In Indian, there are over 200 different dialects, and a  Conducting market research
similar situation exists in China.  Complex products with instructions
 Relations with distributors.
In Nepal, there are 123 languages spoken as mother tongue reported
in census 2011. Some of the important language spoken in Nepal are Out of total population 29,033,914, the literacy rate of Nepal in 2016
given below: is 63.9 % where 76.5 % are male and 53.1% are female.
Table (7.2): Languages spoken in Nepal
Language Percent of the total population 4) Family structure: Family comprise of people ordinarily living in the
Nepali (Official) 46% same house which is based on kinship. Types of family structure can
Msithali 11.7% be categorized into nuclear and joint family.
Bhojpuri 6%
Tharu 5.8%  Nuclear family: The numbers of members are very few in a nuclear
Tamang 5.1% family usually consist of a husband, a wife, a couple of children.
Newar 3.2%
Magar 3%  Joint family: The number of dependents living under the roof is
Bajjika 3% much larger. Those living with a joint family may include, in addition
Urdhu 2.6% to the above, grandparents, married brothers, sisters, wives of sons,
Avadhi 1.9% grandsons, granddaughters, and, relatives.
Limbu 1.3%
Gurung 1.2%
Other 10.4%
Family structure influence on business therefore it is crucial to
Source: National census, 2011 determine size of the family while conducting business:
 Joint families are likely to have higher consumption rate than
nuclear family.
 Nuclear families tend to patronize traditional neighborhood
markets rather than travelling to larger grocery shopping venues
such as super markets or warehouse clubs.
 In most developed countries anybody above 18 years could make
decision for himself or herself while in some countries or societies, as
long as you still live under the roof of your parents, they may
continue to take decisions for you. So, if you intend establish a
business that appeals to young adults, then it is important you
consider the role of parents in the society you intend starting your
business.
Nepal has strong family ties. Nepal has predominantly a joint family.
Males are mostly engaged in earning livelihood and females are
engaged in family management. In Nepal, economic insecurity due to
poverty and unemployment produces widespread and intense social
insecurity. A joint family is thus a source of safety and security to its
members. However, joint family system has been experiencing
problems in recent years and consequently nuclear families are
emerging in urban areas.
5) Social organizations: Social organization is the way a society
organizes itself, how it considers kinship, status system, social
institutions and interest groups. It mainly includes reference group
and social class.
a) Reference groups: Reference group refers to individuals or groups
of people that influences the decisions and opinions of a person or
group. They often serve as our role models and inspiration. It is
formed by some common characteristics that arise from political,
social, occupational, recreational, educational, and religious bases.
Awareness of the major reference groups, persons or family structures
in a community is essential when targeting marketing campaigns
toward them. In Nepal, friends are important reference group
followed by neighbors, relatives, actors, musicians, sport personalities
who serve as role model while making purchase decision.
Reference groups influence consumer behavior in two ways.
 First, they set levels of aspiration, offering cues of what lifestyle and
related purchasing patterns we should strive to achieve.
 Second, they help define the actual items/services considered
acceptable for displaying those aspirations—the kind of housing,
clothing, or car, for example, deemed appropriate for a member of the
group.
b) Social class: Social class is a status hierarchy in which individuals
and groups are classified on the basis of esteem and prestige acquired
mainly through economic success and accumulation of wealth. Social
class can be categorized into three levels: Upper class, Middle class,
and Lower class.
 Upper class composed of those people who are rich, powerful, well-
born or a combination of all those qualities. In Nepal, upper class has
high income with luxuries life style. This class is a very small
segment of the Nepalese population. However, it is growing rapidly.
 Middle-class people are the professional workers and small business
owners. In Nepal, middle class has medium level of income or fixed-
income groups. It is represented by professional people, such as civil
servants, doctors, engineers, lawyers, teachers, traders etc. As the
members of this class are better educated and exposed to different
lifestyles, their aspirations have been constantly growing.
 Lower class people are the one who relies on low-paying wage jobs
for their livelihood and often experiences poverty. In Nepal, lower
class has low level of income with low purchasing power. It is
represented by manual workers, skilled artisans and low level
employees. Nearly half of Nepal’s population belongs to this
category.
AN ANALYSIS OF HOW SOCIO-CULTURAL ENVIRONMENT
AFFECTS THE NEPALESE BUSINESS
The notable factors that determine the role in the functioning of an
organization is the socio-cultural environment of the region in which
the business is operating. Nepalese businesses are influenced by
socio-cultural environment in the following ways:
Figure (7.2): Effects of Socio-cultural environment
Management practice
Effects of socio- Work attitude
cultural
environment Gender difference
Resistance to change

1) Management practices: Socio-cultural factors influenced on
management practices in Nepal as the management is bounded by
traditional values.
 As the family patronage is widespread, there is lack of corporate
culture and professionalism.
 There is dominance of family business where family members hold
the top position of the management that resulted centralized decision
making.
 Employees participation in decision making is not encouraged.
 However, some business organizations are exceptions.
2) Work attitudes: Socio-cultural factors influenced on work attitudes
of Nepalese people in the following ways:
 Nepalese people lack motivation and commitment towards their work.
 Result-orientation is lacking.
 Ethics of hard work is lacking.
 They are careless in time management.
 Government sector is the occupation of priority because of the job
security.
3) Gender difference: There is a huge gap of gender equality in Nepal
in terms of business because it is still male dominating country.
 Although women participation in business is significantly increasing,
business sector is mostly dominated by male.
 Similarly, top level management is occupied by male employees.
Mostly females are recruited in low level job such as receptionist,
customer care service, telephone handler etc.
4) Resistance to change: Most of the Nepalese businessmen and
employees resisted to change. They resist to changes due to the fear
of business loss, job loss, power loss and other reasons.
Environmental adaptation is very slow in business organization.
However, change management in terms of technology-orientated
approaches is few.
5) Business ethics: Socio-cultural forces determine the code of ethics in
Nepalese business as these have prompted, or contributed to, rise in
unethical business practices.
 Nepal is the 131 least corrupt nations out of 175 countries, according
to the 2016 Corruption Perceptions Index reported by Transparency
International.
 High level of corruption in all administrative process leading to high
cost of doing business resulting in low product standards and quality
 Unhealthy competition on promotion of products and services
 Lack of standard certified testing laboratories to ensure quality
product and service.
 Lack of appreciation and recognition for taxpayers who are
transparent and regular on tax compliance.
 Political interference through labour and trade unions.
6) Change in preferences: One of the most important socio-cultural
trends which have an impact on a business is the constantly changing
preferences of customers. A business may build a brand name for
itself and model its core strategies in a certain manner, but if it fails to
recognize and adapt to the changing preferences of the customers, it is
doomed to fail.
EMERGING SOCIO-CULTURAL CHANGES AND TRENDS IN
NEPAL
The socio-cultural environment of Nepal has changed considerably
over the past two decades in terms of foods, dress, working
environment etc. These emerging changes of the Nepal have opened
up new frontiers of business activities. The emerging change and
trends of socio-cultural environment in Nepal are discussed below:
Figure (7.3): Emerging socio-cultural changes and trends in
Nepal
Growing urbanization
Emergence of urban teenagers
Emerging socio-
cultural changes Emergence of female breadwinner
and trends in
Nepal Growth in nuclear family
Change in food culture
Change in lifestyle

1) Growing urbanization: Urbanization refers to the process of growth
in the proportion of population living in urban areas. The fundamental
characteristic of urbanization is the structural shift in employment
from agriculture to non-agriculture pursuits. In Nepal, high urban
growth is occurring in the Kathmandu Valley, the Pokhara Valley, the
Inner Tarai valleys, and in market and border towns located on
highway junctures between the east-west highway and the five main
north-south corridors.
2) Emergence of urban teenagers: Urban teenagers belonging to the
middle and upper class families are now emerging as a sizable and
distinct market segment. Their food habits, dresses, dances, songs,
music, education system, life style are the entire western pattern.
Teenagers spend their pocket money on soft drinks, chocolate, fast
foods, movies and light reading materials. They are after material
comfort and inclined towards pursuit of pleasure.
3) Emergence of female breadwinner: The breadwinner is defined as
someone who earns money to support his/her family. In Nepal, the
trends of female as housewife is progressively transforming into
financial supporters i.e. actively participating in income generating
activities.
6) Change in lifestyle: Lifestyle is the way of living that is expressed in
peoples’ activities, interest and opinion.
 Activities focus on someone’s daily routine and hobbies. Nowadays
Nepalese are quite aware about their health hence they start their daily
routine from morning exercise followed by their regular job (9 AM -
5 PM) and finally attain social functions if sometimes happened
otherwise spend time with their family at home or engages in social
medias.
 Interests reveal person’s concepts and ideals that drive his/her
passions. Interests of Nepalese are increasingly in western pattern-
food, dresses, dances, songs, music, education system, corporate
culture, leisure time etc.
 Opinions reveal person’s a view or judgment formed about
something such as politicians, public figures, movies, actors, TV
shows etc. More often, Nepalese people express their negative
opinions toward politicians. Similarly, Bollywood movies, actors and
TV shows are also the biggest gossips in Nepalese people.
1.

4) Growth in nuclear family: Nepal is very much popular in joint

family structure. Despite of this practice, the new generations are
motivating towards the concept of nuclear family and increasing
substantially because of working class population and/or the influence
of western culture. This has resulted in increased demand of
apartment, old-age care center, Montessori school etc.

5) Change in food culture: Food habits of Nepalese peoples are greatly

changed due to the influence of western cuisine. Most of the Nepalese
people needed belly full of rice to satisfy their hunger but today the
‘pizza culture’ has changed full belly rice culture. People go to the
restaurants with their families and have pizza, burger, chicken and all
the western food.