SATHYABAMA UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

SUBJECT TITLE: BUSINESS ENVIRONMENT SUBJECT CODE: SBAX1025

Course: BCOM Year: III Semester: VIII

UNIT – III: SOCIAL ENVIRONMENT

Cultural Heritage – social attitude – impact of foreign culture – caste and communities – joint
family systems – linguistics and religious groups – types of social organisations – social
responsibilities in business.

Social Environment

Business is an integral part of social system. The social system influences business
which in turn is affected by the business. In type of product to be manufactured and marketed
the way the business should be organized and governed the values and norms etc... are all
influenced by the culture of the society.

The social system is influenced by the way business functions, the innovations,
transmission of innovations and new ideas affect the society.

Cultural heritage:

Heritage means that which is inherited, condition of one’s birth or anything that is
transmitted from ancestors.

Cultural heritage includes customers and traditions including festival, ways of

celebrating different auspicious events, art and literature, ancient places of worship, temple,
monuments & buildings and so on

A very import character of culture is transmission. Cultural transmission takes place

by means of symbolic communication. The great importance of language in cultural
transmission is very clear. Literature, films, television, social institution, advertisement,
marketing techniques and other electronic gadgets play a very important role in cultural
transmission

Nature and process of cultural transmission and diffusion is very important to

business decision making. Businesses including foreign firms contribute significantly to the
preservation and promotion of cultural heritage.
 Eg: Converting traditional building into heritage hotels, promoting are you pay the
tourism, ethnic food festival etc…

Impact of foreign culture:

The business environment in many countries has been significantly influence by the
invasion of foreign culture. The English education has been a significant advantage to India.
The British bureaucratic system which India inherited has its merits and demerits. Japanese
for an investment and management practices have a great impact on the Indian working
culture there is formed a large cross cultured transmission, Techniques and practices like total
quality management [TQM], re-engineering, quality circle and quality just in time[JIT].

Influence of foreign culture has been parsing changes in social attitudes. The cultural
heritage is significantly influenced by foreign culture.

The technological revolution relating to information technology has been

tremendously influencing culture across the world

Globalization is not confined to the international flow of trade and capital. But the
international spread off culture that has been as important as the spread of economic process.

Social attitude:

Social attitude is the general outlook of people of a particular society in respect of any
specific factor. The social attitude is very important for business environment the general
attitudes of people vary related to business. They are favorable, unfavorable and neutral
attitudes towards business.

The differences in the social attitudes and behavior makes cross cultural management
vary challenging the ways of meeting and greeting people, expression of appreciation,
methods of showing respect, ways of conducting meetings & functions, table manners etc…
vary widely between cultures.

Non-verbal communications create even more difficult problems body language has
different interpretations in different cultures as same symbols and gestures may mean
different things in different countries

The social attitude and behavior that varies among people across the world are:

• Way of meeting and greeting people

• Laughter

• Hand shake

Non-verbal communication:

• Body language
 • Gifting people

• Nature and location of use of product

• Values and believes associative and colors

• Differences regarding values associated with numbers

Caste and community:

The caste & community structure and its dynamics of society have very significant
influences on the occupational pattern, entrepreneurship, economic and business
development, work culture, government policies etc… some examples are

• The occupational pattern is traditionally linked to caste and community

• Reservation of certain percentage of job for backward caste and

communities

• They have commendable contribution to development of social sectors

like education and public

• Caste and community are important forces to reckon with politics

presuming government in policy formulation

• Different caste & community have different demand pattern

Linguistic and religious group:

Closely related to caste and community are linguistic and religious group. The
influence of religion race & language and politics & business has been on increase globally.
Number of politically independent nations has been increasing as a result of splitting a single
entry into several one

Different people have their own religious convictions, beliefs, sentiments, customs,
rituals, festivals etc…The cost of ignoring certain religious aspects could be off very high
positive or negative impact in international business.

Many business decision in India and other several countries based on astrological
advices these include decisions regarding the time of launch, location of company, name of
the firm brand name etc… the custom of marriage, naming ceremony of child festivals etc…
vary significantly between religions. These have implification on various businesses

India has numerous languages and their dialects decides the 18th officially recognize

Joint family system:

Broadly there are two types of family

1. Joint family
 2. Nuclear family

Joint family is also known as “individual family system with several generation living
together”

Characteristic of joint family:

1. Several generations

2. Single household

3. Common property and income

4. Common version

5. Centralization

Joint family system in India has undergone various changes. They are not able to keep
away from social change, education, employment, economic independence and
dissatisfaction of members within the system or affected joint family system. Most of
the joint family system have undergone significant changes and have become smaller
inside.

Social organization:

Social organization is grouping of people bound by certain values, policies,

guidelines, formed by serving certain social purposes are achieving common objectives.

Spectrums of social organization are very diverse in nature. They include

1. NGO (Non Government Organization)

2. Trade union

3. Association of Industry

4. Political parties

5. Religious and communal organization

6. Recreation club

7. Association of residence or neighborhood

Characteristics of social organizations:

1. Objectives
 2. Common bondage

3. Structure

4. Roles, responsibilities and rights

5. Leadership

6. Norms

Types of social organization

1. Formal & Informal

2. Closed & opened

3. NGO’s

4. Social activities

5. Beneficially sponsors

1. Formal & informal:

Formal organization is one which as well defined structure regulation and objectives

Informal: there are large number of organization which does not have clear rules,
regulations, objectives and structure.

2. Closed & Open:

Memberships in certain organization are available only to certain specified group or

organization. Such organization recognized as closed organization. Eg: community

There are many social organization were membership are widely open. Eg: political
parties

3. Non-Gov organization:

NGO is also known as voluntary organization. They have been very successful in
exposing many issues and they have become a force to be reckoned with by the government
business and big organization like WHO, World Bank, IMF etc…

4. Social activities:

Most NGO are social activists and they work for social rather than benefits. The
matter often taken up by the social activists are environmental issues consumer interests and
national interests. They are lot of NGO’s which are some of with interest, taking projects
funded by governments.
5. Beneficially sponsor:

Most social organization have been formed to protest the interest of the member of the
organization unlike the social activists.

Eg: workers, industrialist

SOCIAL RESPONSIBILITY OF BUSINESS

Every business enterprise is an integral part of the society. It uses the scarce resources of the
society to continue and grow. Hence, it is important that no activity of business is injurious to
the long run interests of the society. However, it is observed that, in practice, there are a few
socially undesirable aspects of business such as, polluting the environment, non-payment of
taxes, manufacturing and selling adulterated products, giving misleading advertisement and
so on. This has resulted in the development of the concept of social responsibility of business
whereby the owners and managers of business are made conscious about the responsibilities
of their business towards the community and its customers, workers etc.

Meaning :
Social responsibility of business refers to the obligation of business enterprises to adopt
policies and plans of actions that are desirable in terms of the expectation, values and interest
of the society. It ensures that the interests of different groups of the public are not adversely
affected by the decisions and policies of the business.

Reasonable approaches to social responsibilities are

a. Business in an economic entity and cannot push it profitability meeting

its social needs

b. Each business must taken into account much situation in which it

means the need of the “state holder”

c. Social responsibility related to the size of a company and the industry

d. Business must assume their share in the social burden and willing to
observe reasonable social cost.

Social Responsibilities towards Different Groups:

It needs to be noted that the responsibilities of those who manage the business cannot be
limited to the owners. They have to take into account the expectations of other stakeholders
like the workers, the consumers, the government and the community and public at large.

(a) Responsibility towards the shareholders or owners: The shareholders or owners are
those who invest their money in the business. They should be provided with a fair return on
their investment. You know that in case of companies it takes the form dividends. It has to be
ensured that the rate of dividend is commensurable with the risk involved and the earnings
made. Besides dividends, the shareholders also expect an appreciation in the value of shares.
This is governed primarily by company’s performance.
 (b) Responsibility towards the Employees: A business enterprise must ensure a fair wage
or salary to the workers based on the nature of work involved and the prevailing rates in the
market. The working conditions must be good in respect of safety, medical facilities, canteen,
housing, leave and retirement benefits etc. They should also be paid reasonable amount of
bonus based on the business earnings. Preferably, there should also be a provision for their
participation in management

(c) Responsibility towards the Consumers: A business enterprise must supply quality
goods and services to the consumers at reasonable prices. It should avoid adulteration, poor
packaging, misleading and dishonest advertising, and ensure proper arrangement for
attending to customer complaints and grievances.

(d) Responsibility towards the Government: A business enterprise must follow the
guidelines of the government while setting up the business. It should conduct the business in
lawful manner, pay the taxes honestly and on time. It should not indulge in any corrupt
practices or unlawful activities.

(e) Responsibility towards the Community: Every business is a part and parcel of our
community. So it should contribute towards the general welfare of the community. It should
preserve and promote social and cultural values, generate employment opportunity and
contribute towards the upliftment of weaker sections of the society. It must take every step to
protect the physical and ecological environment of the society. It should contribute to the
community development programmes like public health care, sports, cultural programmes.

Looking at the importance of the social responsibilities of business towards various groups, it
would have been better if the companies act provided for the reporting of the social activity in
the annual report of the companies. However, a few large companies have been voluntarily
reporting their social performances in their Annual Reports regularly. The prominent among
them are Cement Corporation of India, Indian Oil Corporation, Tata Iron and Steel Company,
Asian paints and ITC. These reports reveal that companies are becoming eco-friendly and
conscious of their role in community development.

Areas of Social Responsibility

The following is the list of areas of social responsibility of business, given by Keith and
Blomstorm

(a) Environmental Quality

i. Cleaning up of existing pollution
ii. Design of processes to prevent pollution
iii. Noise Control
iv. Control of land use
(b) Consumerism
i. Truth in lending, in advertising and in all business activities
 ii. Product warranty and after sales services
iii. Control of harmful products
(c ) Need for Society
i. Use of business expertise and community problems
ii. Aid with health-care facilities
iii. Aid with urban renewal
(d) Government Policy
i. Restrictions on lobbying
ii. Extensive new regulation of business
iii. Restrictions on international operations
(e) Business Prospects

i. Financial support for various activities

ii. Gifts to education
(f) Labour Welfare
i. Improvement of occupational health and safety
ii. Provision of day-care for children of working mothers
iii. Expansion of employee rights
(g) Shareholder Betterment
i. Improvement of financial decisions
ii. Disclosure of activities affecting the environment and social issues
(h) Economic activities

i. Control of agglomerates
ii. Break-up of giant industries

Benefits of Corporate Social Responsibility in India

• Improved financial performance

• Reduced costs

• Enhanced brand image and reputation

• Increased sales

• Increased customer loyalty and satisfaction

 • Increase productivity and quality

• Increased ability to attract and retain employees

• Reduced regulatory oversight

• Brand visibility, recognition and awareness

• Increased market-share

• Effective positioning

• Competitive advantage

• More engaged investors

• Environmental sustainability

PART – A
1. What is Joint family system?

2. What is the impact of social environment on business?

3. What is cultural heritage?

4. What is the impact of foreign culture?

5. How social organisations can be beneficial to business?

6. What are NGO’s?

7. What are linguistic and religious groups?

8. What are the features of Joint family system?

9. What are the implications of case system for business?

10. What is Social responsibility?

11. What are the types of Social organisations?

12. What are social attitudes? How do they affect business?

13. Discuss the impact of culture on business.

14. What is the impact of social groups on business?

15. What are the responsibilities of business to government?

 PART – B
1. What are non-government organisations (NGO’s)? What is their significance for
business?

2. Discuss on the responsibilities of business to the various constituents of the society.

3. Enumerate on the emerging global culture and its implications for business.

4. What are social organisations? Discuss in detail the different types of social
organisation.

5. Explain the role of religion in shaping society. How it affects business?

6. What are the important characteristics of social organisation? How do they affect
business?