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Unit 3Social and Cultural EnvironmentQ1) EXPLAIN THE SOCIAL AND CULTURAL ENVIRONMENTA1) The cultural environment consists of the influence of religious, family, educational, and social systems within the marketing system. Marketers who intend to market their products overseas could also be very sensitive to foreign cultures. While the differences between our cultural background within the India and people of foreign nations could seem small, marketers who ignore these differences risk failure in implementing marketing programs. Failure to consider cultural differences is one among the first reasons for marketing failures overseas.A number of cultural differences can cause marketers problems in attempting to promote their products overseas. These include: (a) Language, (b) Colour, (c) Customs and taboos, (d) Values, (e) Aesthetics, (f) Time, (g) Business norms, (h) Religion, and (i) Social structures. Q2) EXPLAIN THE IMPACT OF FOREIGN CULTURE ON BUSINESS A2) Impact of Foreign Culture on Business Culture is formed based on beliefs, attitudes, assumptions, values and a number of other social factors. Every culture is different, and has different types of etiquette. Every day deals are lost through misunderstandings, even between relatively similar cultures. Culture varies from nation to nation. it's necessary to review the cultural variables Impacts• Changing attitude of employees towards work and goal• Workforce diversity• Changing attitude of managers• Change in consumption pattern• Change in saving habits• Changing attitude of managers• More labour mobility Culture impacts many things in business, including• The pace of business;• Business protocol—how to physically and verbally meet and interact;• Decision making and negotiating;• Managing employees and projects;• Propensity for risk taking; and• Marketing, sales, and distribution. Impact of culture and traditional values on business• Culture creates people it determines ethos of individuals • Culture determines goods and services for people• Language makes important contribution in making business a hit • Attitude – that determines people’s objectives• Role of family in protection, inheritance, support, affection, and transmission of cultural values• Culture makes person ambitious. Q3) WRITE A NOTE ON SOCIAL AUDIT A3) ‘Social Audit’ is “a public assembly where all the details of a project are scrutinized”. it's “a way of measuring, understanding, reporting and ultimately improving an organization’s/programme’s social and ethical performance”.Social Audit (SA):*Social Audit is a process within which details of the resources, both financial and non-financial, is used by public agencies for development initiatives and is shared with the people often through public platforms.*It includes in-depth scrutiny and analysis of the working of an entity within which the general public is involved is-à-vis. its social relevance.Origin of social audit in India:*In India, the initiative of conducting social audits was taken by Tata Iron and steel company Limited (TISCO), Jamshedpur within the year 1979.*Social audit gained significance after the 73rd amendment. The approach paper to the 9th FYP (2002-07) emphasized upon social audit for effective functioning of Panchayat Raj institutions (PRIs) and empowered gram sabhas to conduct SAs additionally to its other functions.*National Rural Employment Guarantee Act, 2005 provides for normal “Social Audits” so as to ensure transparency and accountability within the scheme.*The state government shall identify or establish, under the NREGS, an independent organization, Social Audit Unit (SAU), at the state level, to facilitate conduct of social audit by Gram Sabhas.
Features of social auditVoluntary process Evaluates social performance Helps to meet corporate social responsibility Subjective process it varies from one company to other It is an analytical study of business Q4) EXPLAIN THE CONCEPT OF CORPORATE GOVERNANCE A4) Corporate governance refers to the accountability of the Board of Directors to all stakeholders of the corporation i.e. shareholders, employees, suppliers, customers and society in general; towards giving the corporation a good, efficient and transparent administration.Following are cited some popular definitions of corporate governance:(1) “Corporate governance means company managers its business in a manner that's accountable and responsible to the shareholders. in a wider interpretation, corporate governance includes company’s accountability to shareholders and other stakeholders like employees, suppliers, customers and native community.” – Cather wood.(2) “Corporate governance is that the system by which companies are directed and controlled.” – The Cadbury Committee (U.K.)Certain useful comments on the concept of corporate governance are given below:(i) Corporate governance is more than company administration. It refers to a good, efficient and transparent functioning of the company management system.(ii)Corporate governance refers to a code of conduct; the Board of Directors must abide by; while running the company enterprise.(iii)Corporate governance refers to a group of systems, procedures and practices which make sure that the corporate is managed in the best interest of all corporate stakeholders.Need for Corporate Governance:The need for corporate governance is highlighted by the subsequent factors:(i) Wide Spread of Shareholders:Today a company features a very large number of shareholders spread everywhere the state and even the world; and a majority of shareholders being unorganised and having an indifferent attitude towards corporate affairs. the thought of shareholders’ democracy remains confined only to the law and therefore the Articles of Association; which needs a practical implementation through a code of conduct of corporate governance.(ii) Changing Ownership Structure:The pattern of corporate ownership has changed considerably, in the present-day-times; with institutional investors (foreign also Indian) and mutual funds becoming largest shareholders in large corporate private sector. These investors became the greatest challenge to corporate managements, forcing the latter to abide by some established code of corporate governance to create up its image in society.(iii) Corporate Scams or Scandals:Corporate scams (or frauds) within the recent years of the past have shaken public confidence in corporate management. The event of Harshad Mehta scandal, which is probably, one biggest scandal, is within the heart and mind of all, connected with corporate shareholding or otherwise being educated and socially conscious. The need for corporate governance is, then, imperative for reviving investors’ confidence within the corporate sector towards the economic development of society.(iv) Greater Expectations of Society of the corporate Sector:Society of today holds greater expectations of the corporate sector in terms of reasonable price, better quality, pollution control, best utilisation of resources etc. to satisfy social expectations, there's a requirement for a code of corporate governance, for the simplest management of company in economic and social terms.(v) Hostile Take-Overs:Hostile take-overs of corporations witnessed in several countries, put a question mark on the efficiency of managements of take-over companies. This factors also points bent the necessity for corporate governance, within the sort of an efficient code of conduct for corporate managements.(vi) Huge Increase in Top Management Compensation:It has been observed in both developing and developed economies that there has been a good increase within the monetary payments (compensation) packages of top level corporate executives. There’s no justification for exorbitant payments to top ranking managers, out of corporate funds, which are a property of shareholders and society.This factor necessitates corporate governance to contain the ill-practices of top managements of companies.(vii) Globalisation:Desire of more and more Indian companies to urge listed on international stock exchanges also focuses on a requirement for corporate governance. In fact, corporate governance has become a buzzword within the corporate sector. there's no doubt that international capital market recognises only companies well-managed consistent with standard codes of corporate governance. Q5) WRITE A NOTE ON SOCIAL RESPONSIBILITY OF BUSINESSA5) As we are member of family, we are also part of society. Society and family do several things for our benefit and also expect certain obligations from us. As a student, as an individual, you have certain responsibilities such as completing your assignment in time, taking care of your parents, eating healthy food and keep yourself fit and keeping promises.It is true for business also business operates within a society. It uses resources of society. It depends on various factors of society for its function. Land, water and others resources i.e. factors of production required by business units are owned by society. Requirements of capital and financial needs are supported by investors who are members of society. Without employees and customers, business unit cannot function.So all the activities of business should be performed in such a manner that they will not harm any part of society rather they will protect and contribute to the interest of society. Social responsibility refers to all such duties, obligations of business towards welfare of society. Profit making is not the sole function.Definition:The international seminar on the social responsibility of business held on New Delhi in 1965 defined – “Social responsibility of business has responsibility to the customers, workers, shareholders and the community.”In ancient literature, we found a concept of helping poor and disadvantaged through profits made by the traders and emperors. So it was philanthropic concept. It was developed as the business was growing. We found charitable foundations, education and health care institutions and trust of community. Activities of charity such as developing gardens, parks, motivation of research, sponsoring games and sports at national and international level are examples of social responsibility. Modern concept has wider idea, it includes ethical, legal and economic aspects.
Observe recent trends of business, we find globalization and pressing ecological issues. That is why role of business is redefined. Corporate social responsibility (CSR) is the newest management strategy where we try to create a positive impact on society while doing business.International organization for standardization (ISO) has developed an international standard to provide guidelines for adopting and disseminating social responsibilities ISO 26000 for social responsibility. It was published in 2010. These standards are encouraging voluntary commitment for social responsibility and also its methods of evaluation. The standards describe itself as a guide of dialogue for business.Recent Trends (CSR):Improved relations with investors and community Better access to capital Stronger financial performance Profitability through operational efficiency Enhance employment relation Innovation and Productivity Q6) EXPLAIN THE TECHNOLOGICAL ENVIRONMENT IN DETAILA6) Technological environment refers to the state of science and technology within the country and related aspects like rate of technological progress, institutional arrangements for development and application of latest technology, etc.According to the well-known economist J.K. Galbraith, technology means, “systematic application of scientific or other organised knowledge to practical tasks”.Technology comprises of both machines (hard technology) and scientific thinking (soft technology) used to solve problems and promote progress. It consists of not only knowledge and methods required to hold on and improve production and distribution of products and services but also entrepreneurial expertise and professional skills. Technology includes inventions and innovations.The main features of technological environment are as follows:Technological environment is a component of macro or indirect action environment. Technological environment changes in no time Technological environment affects the way in which the resources of the economy are converted into output. Technological environment is self-reinforcing. An invention in one place results in a sequence of inventions in other places. Q7) EXPLAIN THE IMPACT OF TECHNOLOGY ON BUSINESSA7) Technology has transformed the modern economy and world deeply. From changing the preferences of consumers to reshaping the assembly and marketing of products, technology manifests itself in small details of daily business operations. It’s increased the productivity of investments and workers, accelerated economic activities, promoted interdependence between the modern industries and allowed the deployment of latest technologies. Here are a number of the impacts of technology on business process operations. ProductivityBy improving business processes, product development and developing worker skills technology is increasing productivity in most business operations. Even though the exact size of improvement is debatable, some technologies like emails make communication faster and easier. Practice management software and online customer services reduce personal attention additionally to increasing the productivity of every investment in the areas without sacrificing the customer experience. Practice management software is employed by various professional industries like legal software, accounting software and medical software.AccelerationWhether it’s through fast online data transfers or through airplanes, technology has accelerated business operations. A process that took several weeks some years ago through face-to-face interactions and mail can now take a few seconds with computer keystrokes. Web purchasing, editing of photos with services like Fixthephoto, online money transfers and sharing of files through the internet has accelerated the production cycle and has made the production, capitalization and therefore the sale and distribution of products faster. From the production standpoint, acceleration of technologies has forced companies to meet the demands of their customers faster and provided the required tools for the processes.Global communicationCompanies can now communicate with others easily and transfer resources globally and are therefore ready to conduct businesses with clients and suppliers from all parts of the globe. Availability of worldwide economic data and internet video conferencing make the conduction of companies feasible and opening a business on another continent is more like opening one within the neighbouring town. Technology has facilitated integration and interdependence through the improvement of transport, communications, and logistics.Product developmentTechnological innovations make consumers demand new products. Therefore, businesses need to keep adjusting their operations to match the market demands. Businesses are integrating new technologies including software packages and computers into their production cycle and daily operations. They will now produce new products like new electronics. Businesses driven by the desires of consumers for brand spanking new technological goods and convenient technological services are ready to compete supported the pace of innovation and new technologies adoption.RisksEven though the adoption of the new technology comes with many benefits for businesses, the technology presents numerous risks. If your employees don’t have the skills to use the new systems, technology will decrease productivity and reduce the satisfaction of your employees. The fast migration of corporate and personal operations data to the online databases makes companies prone to cyber-attacks, which may affect the operations adversely or maybe, shut the business down.The business world has witnessed a rise in new technology adoption and as a result, things have improved rapidly and transformed business operations for better growth. Almost every business process has seen a major transformation. With increased automation, some things have changed and technological advancements have affected the production processes.Impact of technology on businessTechnology and society Technology reaches to people through business Faster and better services than human Creates new jobs and develops new skills Creation of new social system – new food, new dressing style, changed food habits. 2. Technology and economyIncreased productivity at lower cost Job becomes more intellectual Problem of employ retention Demand for multi professional managers Increased capital investments on new ideas, training, educating managers Impact on product life Allocation of more funds to R&D. 3. Technology and plant level changesInfluence on organization structure Increase in risk New set of problems Resistance to change Growth of E – Business Huge impact on marketing Q8) WRITE A NOTE ON COMPETITIVE ENVIRONMENT A8) A competitive environment is the dynamic external system in which a business competes and functions. The more sellers of a similar product or service, the more competitive the environment in which you compete. look at nutriment restaurants - there are numerous to choose from; the competition is high. However, if you look at airlines servicing Hawaii, very few actually fly to the islands. Direct competitors are businesses that are selling the same kind of product or service as you. for instance, McDonalds is a direct competitor with Burger King. Indirect competitors are businesses that still compete even though they sell a different service or product. The products or services offered by indirect competitors tend to be those that can be substituted for each other. Again, considering travel, you've got the choice to travel by plane, train, or car. Therefore, airlines are competing with train lines and buses (assuming the travel doesn't go overseas). Advantages and disadvantagesWithout competition, businesses don't last very long, if at all. There are advantages and drawbacks to having competition. The disadvantages are probably the most pronounced, as nobody likes competition! More competition means fewer sales because the other companies take some market share.Competitors can become allies with other competitors and become more powerful within the market.Competitors can take away potential investors or buyers. An investor isn't likely to invest in two companies that compete; they're going to choose the one to invest in.Competitors are fierce! Some companies may try to convince consumers why your brand or product is inferior to theirs, potentially damaging your reputation.Despite the laundry list of disadvantages, there are some significant advantages to competition. Nothing motivates a company more than having competition! Look at smart phones - every company tries to outdo the last released model. It spurs innovation and creativity on the way to better your product or service.Marketing efforts from competition can increase your sales also. Check out the car industry advertising the advantages of hybrid vehicles. Ford's hybrid commercial can potentially benefit Toyota's sales of hybrids because it's spreading the word of how great hybrid cars can be. Q9) EXPLAIN THE MANAGEMENT THEORY OF MICHAEL PORTER.A9) Michael Porter theory focuses on several major models. the foremost practical are Expectancy Theory and Value Chain Analysis.Through Expectancy Theory, Porter codified the main factors that impact an employee's motivation to perform. He stated that numerous factors fuel an employee's efforts to reach an organizational goal, including the expectation that performance will yield positive rewards which rewards will match effort. Through Value Chain Analysis, Porter defined effective supply chain management, presenting a model which categorizes the activities that form a company's product-delivery system as either Primary or Support activities and showing how they work together to make profit. Both models, alongside Porter's more complex Five Forces model, form the centre of Michael Porter's Strategic Management Theory.In order to properly understand Porter's Leadership Theory, you need to focus on the subsequent information:1. You need to achieve as much knowledge as possible on Porter management theory.2. You'll need to hire a business consultant who is thoroughly comfortable with management theories.3. You must find tools that allow you to place Porter's theory into action.Value chain model of Michael PorterThe Value chain model by Michael Porter offers a summary of the components that can make up an organization. The model is therefore ideal for stopping a new strategy for a while to see whether you have not overlooked a business unit. the value chain comes from the book Competitive Advantage: creating and sustaining superior performance from 1985.5 forces model of Michael PorterThe 5 forces model by Michael Porter is that the leading management model to analyse an industry and determine how competitive this industry is. From this analysis you'll determine how attractive the market is that a corporation enters (or wants to enter). Michael Porter's five forces model relies on five forces which will play a role within a branch or industry. Michael Porter's famous five-force model was developed in 1979. Generic strategies of Michael PorterThe Generic strategies by Michael Porter mean that you can select from four strategies as a corporation. As a corporation, consistent with Michael Porter, you have to make sure that you concentrate on one of these strategies and that you do not get stuck within the middle of anything. The four Generic strategies of Michael Porter are:• Cost leadership• Differentiation• Cost focus• Differentiation focus Q10) EXPLAIN THE COMPETITIVE STRATEGY IN DETAILA10) Competitive strategy is a long-term action plan of a company which is directed to achieve competitive advantage over its rivals after evaluating their strengths, weaknesses, opportunities and threats in the industry and compare it with your own. Michael Porter, a professor at Harvard presented competitive strategy concept. According to him there are four sorts of competitive strategies that are implemented by businesses globally. It’s necessary for businesses to know the core principles of this idea that will help them to make a well-informed business decisions in the course of action.Competitive StrategyMichael Porter divided competitive strategy in four differing types of strategies.Cost Leadership StrategyCost leadership strategy is difficult to implement for small scale businesses because it involves making long term commitment for offering products and services at lower prices within the market. For this purpose firms got to produce products at low cost otherwise it'll not make profit.Since the cost leadership means to become low cost producer or provider in the industry, Any large-scale business which may provide and manufacture products at low cost by attaining economies of scale. There are many cost leadership factors such efficient operation, large distribution channels, technological advancement and bargaining power. Here Walmart could be a good example.Differentiation Leadership StrategyIdentifying attribute of a product which are unique from competitors in the industry is that the driving factor in the differentiation leadership strategy. When a product is able to differentiate itself from other similar products or services within the market through superior brand quality and value added features it'll be able to charge premium prices to cover the high cost.Cost Focus StrategyThis strategy is sort of a resemblance to the cost leadership strategy; however, a major difference is that the value focus strategy businesses target a particular segment within the market which segment is offered the lowest price of the product or service. this sort of strategy is extremely useful to satisfy your consumer and increase brand awareness.Differentiation Focus StrategySimilar to the cost focus strategy, differentiation focus strategy targets a specific segment within the market; however, rather than offering lower prices to consumer; firms differentiate itself from its competitors. Differentiation strategy offers unique features and attributes to appeal its target segment.Market Leader Strategies Almost every company follow a market leader who has the biggest market share. Usually, the leader leads the opposite firms in new product developments, price changes. Distribution systems & promotion event However, the leader might not be respected by others. But others may concede its dominance. Companies only follow the leader, take a challenge, imitate or avoid. The best-known market leader is-Walmart McDonald’s Verizon Coca-Cola Caterpillar Nike Facebook Google
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Traditional Help i.e. poor people disadvantaged section of society |
Ethical - avoid questionable practices Modern Concept Legal - obeying all laws – consumers/environment law Economic - minimizing cost and maximize sales revenue |
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