Name: Ketan K.

Naik
Roll No:14307A0009
MMM
Subject: International Business
Topic: OFFSHORE CENTRES OF SINGAPORE,
MAURITIUS AND MALAYSIA

SOCIAL ENVIRONMENT

SOCIAL FACTORS AFFECTING INTERNATIONAL

BUSINESS OPERATIONS
The social environment primarily affects the strategic
management process within the organization in the areas of
mission objectives setting and decisions related to products and
markets. Major social factors considered under international
business are as follows :-

1) National Taste :- in Thailand, people prefer black shampoo;

Nestle brews different varieties of instant coffee because
people in those countries have different tastes, uncommon
in other countries. Green is the favourite colour of all the
Arab countries; red is still widely used in Russia, in banners,
posters, and hoardings although communism is in no way
relevant to modern Russia.
2) Language :- Cross culture and cross border operations call
for necessary language skills, e.g. South Koreans have learnt
Indian Languages to operate in India. One can see this in
Hyundai or LG factories in India. Companies also have to
change their brand names and slogans in different countries.
In Japan, General Motors slogan body by fisher means
corpse by fisher, and Pepsi Cola slogan come alive
means come out of the grave. Prior to promoting the
brand, one has to take into account the socio-cultural
background of a specific nation and different interpretations
of a name in the local language.
3) Values and Beliefs :- It is also important for companies to
understand the significance of different designs and colours
in different countries. For example, blue is perceived as
feminine in Holland and masculine in widen.
Green is
favourite colour in the Muslim world, but is associated with
illness in Malaysia although it is a Muslim country. White
indicated death in china and Korea but it is the colour of
bridal dresses in Europe. Red is associated with danger in

many countries but it is a favourite in Russia. Another

example is swastika, which is considered sacred in India,
but has completely different connotations in the west.
4) Demography :- A number of demographic factors such as
age, sex ratio, family size and occupation influence the
business of many companies. Different companies
concentrate on different segments. For example, Barbie
generate huge revenues through the childrens segment of
affluent countries.
5) Literacy Rate :Countries with a high literacy rate
experience a better standard of living. Here the need is for
standardizes goods, supported by technical services. For a
country with an educated population, the amount of training
required for the staff will be far less than in the case of the
country which has a low literacy rate. This is an important
factor, as it influences the cost incurred. An argument holds
in the case of educating the consumer about the
manufactured.
6) Female Workforce :- The most spectacular change that has
taken place in the current era is the empowerment of women
throughout the world. In China, Indonesia, Russia and
Thailand, women are major contributors to the GDP. With
economic independency, women no longer have to depend
on men to make decisions about what to buy; they can make
their own decisions about whether to purchase any
consumer product or durable. Dulex, a well-known brand of
paint in Europe was promoted through campaigns directed at
women, because it was felt that women have an aesthetic
taste for colours in the household paint segment. The
performance of the iPod of Apple hit the roof in terms of
revenue generation due to female customers. The female
workforce is very strong in various sectors in many
countries. For example, Indian women in IT-enabled
services and handicrafts, Chinese women in the soft toys and
ceramics and Indonesian women
in garments and

paperwork, who have brought great success to their

countries.
7) Double Income Families :- As the household income
increases, the demand for the number of products increases
proportionately. This is especially true for packaged food
items, electronic gadgets, household appliances, health
equipment, Japanese entertainment electronics and French
perfumes dominate in the whole of Europe and North
America. Pizza Express, McDonald and Kentucky Fried
Chicken invariably rule the households of double income
families throughout the world.
8) Impuse Buying :- Benefit-oriented buying is taking place
everywhere. Pre-planned shopping and scheduled purchases
are gradually going away. Throughout the world, people
need instant items. They see, ask and by. It is a major
challenge to international businessmen to provide benefits to
lure impulse buying.

IMPACT OF SOCIAL ENVIRONMENT ON

INTERNATIONAL BUSINESS
When a company operates in a foreign country, it must consider
the possible effects of many social variables such as civil war,
riots, disorders caused by tribal strife, unequal income
distribution, union militancy, religious divisions, and antagonism
between social classes.
The following points highlight the significance of the social
environment in moulding peoples behavior and its impact on
business organizations :
1) Social environment creates or influences the attitude,
personality, thought process, and behavior of the people who
are part of it.
2) It determines or influences consumption patterns and demand
for goods and services in a society.
3) Peoples attitude towards business and work is also strongly
influenced by the culture in which they areborn and brought-up
4) The extent of collectivism and individualism in the thinking and
behavioure of people is strongly influenced by their culture .
This further affects the behavoiure of individuals as consujmers.
5) Concern for environment pollution , attitude towards
consumerism, use of mass media and the role of business in
society are strongly influenced by the culture of a society.
6) Demonstration of ethical behavior in business decisions,
corporate governance practices , attitude and actions towards
social responsibility are also strongly influenced by the sociocultural ethos of society . For example, the high level of
consciousness in some societies about global warming and
climate change
has forced business to developed green

products and services for those societies . The social

responsibility of environment- friendly, business is likely to help
them to flourish inb such societies such more environment
conscious. However they will have little impact in a society
where people are not aware about the impact of their lifestyle
on the environment .
7) Awareness about the rights and the work ethics of the members
of society are strongly affected by its socio-cultural milieu.
8) Parameters of social division like the caste system too have an
impact on the attitude and thinking of people as consumers of
goods and services .3
9) Although different regions countries and states have their own
distinct culitures yet some elements of particulars culture are
getting globalised with the increased movement of people and
the global spread of the due to the use of communication
technologies.
Social environment also affects the motives to make a buying and
the communication strategies needs to be customized as per the
varied social traits for Different markets. The socialbelifes and
aspirations also vary significabtly among countries and the
marketing mis has to be tailor made to suit the social norms of
the target market.