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NME Lesson: Socio Cultural Environment Lesson Developer: Ms. Reena Talwar Ms.Nidhi Sharma College/Dept: Bharati College Shivaji College University of Delhi Institute of Lifelong Learning, University of
NME Lesson: Socio Cultural Environment Lesson Developer: Ms. Reena Talwar Ms.Nidhi Sharma College/Dept: Bharati College Shivaji College University of Delhi Institute of Lifelong Learning, University of Delhi 1 Lesson: Culture and its Impact on Business Table of Contents 1: Learning Outcomes 2: Introduction 3: Meaning and Elements of Culture 3.1: Meaning and Nature of Culture 3.2: Elements of Culture 4: Distinctive Features of Culture 4.1: Cultural Adaptation 4.2: Cultural Shock 4.3: Cultural Transmission 4.4: Cultural Conformity 4.5: Cultural Lag 5: Cultural Traits and its Impact on Business 6: Socio-Cultural Factors, Influencing Business 6.1: Religion 6.2: Language 6.3: Consumer Preferences and Beliefs 6.4: Etiquettes 6.5: Social Trends Summary Exercises Glossary References 1. Learning Outcomes: After you have read this lesson, you should be able to: Understand the definition, meaning and nature of Culture. Learn about different elements of culture. Understand various distinctive features of culture. Identify cultural traits and patterns, and their impact on business. Gain insights on various socio-cultural factors that influence business operations. Institute of Lifelong Learning, University of Delhi 2 2. Introduction: Culture is considered to be an important component of business environment, and is highly complex in nature. There are various dimensions, patterns and traits of culture which are difficult to define and understand for a business firm. A firm which carries out business activities without understanding the cultural dimensions of the environment, in which it operates, faces severe problems in business. Many multinational corporations also believe that cultural differences are the most important challenges that are faced by a firm. Therefore, it is significant, for a business firm, to understand the concept, features, traits and patterns of culture; and how socio-cultural factors can influence the business activities, and to what extent. 3. Meaning and Elements of Culture: 3.1. Meaning of Culture: Culture is an aggregative concept which comprises of customs, attitudes, values and beliefs of people, living in a society. It is the way people lead their lives and controls the way of their thinking and actions. According to E. B. Taylor, Culture is defined as Culture of Civilization is that complex whole which includes knowledge, belief, cult, morals, law, custom, and any capabilities and habits acquired by a man as a member of society. On the basis of above definition, the concept of culture can be explained through the following features: 1. Culture is an aggregative concept, comprising of customs, attitudes, values and beliefs of people, in a society. 2. Cultural values are essentially learned by a person, during the course of his/her development. 3. Cultural values are developed over a period of time through social interaction amongst people, living in a society. 4. Culture determines human personality, and its symbolic quality makes it meaningful to people. 5. Culture is cumulative in nature and passes on from one generation to another. 6. There are two types of Culture: a. Material Culture: Material Culture consists of man-made materials. For example, television, automobile etc. b. Non-Material Culture: Non-material culture comprises of factors like language, ideals, attitudes, values, beliefs etc. Institute of Lifelong Learning, University of Delhi 3 Value Addition 1: Pause & Think Difference between Material Culture and Non-material culture Material culture includes all physical objects that define a culture like clothing, food, schools, temples, factories etc. These physical aspects help to identify the behavior and attitude of the members of a culture. Non-material culture includes thoughts and ideas of people about their culture and does not refer to any physical objects. These include beliefs, values, language, norms etc. As an activity, think about two examples each of material and non-material culture and analyze how they influence the behavior of members of that culture. INTERACTIVE Elements of Culture: Culture has the following basic elements, as shown in the diagram below: Figure 1: Elements of Culture KNOWLEDGE & BELIEFS Elements of Culture IDEALS PREFERENCES i.knowledge and Beliefs: Knowledge and beliefs are prevailing notions of reality and refer to scientific realities, myths and metaphysical beliefs. An example of scientific reality is that earth revolves around the sun and a person can take rebirth is considered as a myth. When people share particular cultural values and beliefs, they tend to become hostile towards others who do not believe in their values. For example, in the U.S., it is believed that a skilled and hardworking person will get ahead in life whereas in some other countries, it is believed that outcomes vary more from luck. ii.ideals: Ideals refer to norms of the society which determine what is right, expected or customary in a given situation. These norms are generally enforced through sanctions i.e. Institute of Lifelong Learning, University of Delhi 4 rewards for the right conduct and punishment for the incorrect behavior. Ideals consist of folkways and mores. Folkways refer to guidelines for proper conduct that are enforced informally, for example, the manner to greet a friend or respect for elders. Mores, on the other hand, refer to obligations which are considered important for the benefit of the society. iii.preferences: Preferences of people in a society determine those things in life which attract people or have a greater liking over others. A country s culture helps in setting the standards in food, housing, clothing etc. Preferences vary between different cultures i.e. things which seem to be attractive in one culture might be unattractive in another. For example, Americans have a preference for automatic cars whereas majority of Europeans have cars with manual gears. Europeans prefer to eat more varied and balanced meals and less fast food as compared to Americans. Cultural characteristics play a very significant role in formulation of business strategies. For a business, ignorance of customs, traditions, preferences and tastes can prove to be very expensive. For example, Nestle makes a variety of instant coffee to satisfy tastes and preferences of people of different nations. INTERACTIVE 2 4. Distinctive Features of Culture: 4.1 Cultural Adaptation: Cultural adaptation signifies the way an individual or a social system adjusts to fit into a particular culture. The social system can be a small group i.e. the family or a large group i.e. an organization or even the complete society. Cultural adaption is required for survival of both an individual and an organization. The changes in food habits, clothing etc., of individuals, according to the type of weather conditions, are forms of adaptation. An individual, who changes his religion, has to adapt himself to the cultural values of the new religion. An Indian, who decides to settle abroad in U.K., must adapt to its social and cultural environment. A business firm must also take into consideration the local cultural values before making important decisions. For example, it is important for a business firm to be aware of cultural and social background of the target customers while taking decisions related to introduction of new products, segmentation of market and formulation of product and promotion strategies. A variation in cultural values or environment implies difference in people s habits and patterns of living. This awareness, understanding of local beliefs and values, can be helpful for a business firm in the following manner: i. The behavior of employees, in an organization, is largely determined by their cultural values; and it can help business managers to understand their behavior and conduct in a better way. Institute of Lifelong Learning, University of Delhi 5 ii. The response and feedback of people, towards new ideas and products, can be easily predicted by observing their cultural habits and ways of living. iii. The understanding of cultural differences among people and markets can help business managers in making effective decisions, and can help them in the improvement of their business strategies. For example, McDonald s has become a successful brand in India due to its strong adaptation to local culture and effective pricing strategies. INTERACTIVE Cultural Shock: Changes in the cultural environment sometimes lead to cultural shock which is a feeling of insecurity, anxiety and confusion, caused due to strange culture. For instance, a person who comes to India from USA, experiences a cultural shock because the cultural environment of India is very much different from USA. Similarly, a multinational corporation, from Japan, experiences a cultural shock when it starts its business operations in India. Therefore, proper efforts must be made by the global business firms to understand the new culture of foreign nations and adapt to it in due course of time, if they want to be successful in their operations. For example, Starbucks faced lot of difficulties while entering the Chinese markets. The first and foremost being the non-smoking policy of Starbucks which was against the high smoking Chinese customers who would not feel happy to be kept away from smoking while having a cup of coffee. Secondly, while a majority of US customers drink coffee while walking or driving to work, Chinese, on the other hand, prefer to drink coffee inside the Starbucks coffeehouse with their friends or colleagues. Customers in China visit Starbucks not only for the coffee but to enjoy the relaxing environment inside the coffeehouse. Moreover, as against Americans, they never drink coffee alone and use to have a meal along with it. So Starbucks had to introduce great meal options for their Chinese customers. 4.3 Cultural Transmission: One of the important characteristics of culture is its transmissive quality. Cultural transmission refers to the process whereby elements of culture are transmitted: i. from one generation to another; ii. among members of similar culture; iii. among members of different cultures. Transmissive characteristic of culture makes it cumulative in nature. As time progresses, new ideas, values and beliefs get added to the existing culture. Transmission of culture takes place both vertically and horizontally. Young generation learns cultural values and beliefs from their parents, teachers and other important members of Institute of Lifelong Learning, University of Delhi 6 their culture. Similarly, the elders learn new ideas and emerging trends from the young generation. New ideas, styles, habits and traits are also learnt through contemporaries. Various forms of media communication help in cultural transmission. Films, theatre, advertising, literature and social institutions play important roles in the process of cultural transmission. Cultural transmission also leads to cultural diffusion i.e. spreading of cultural elements from place to place. Value Addition 2: Did you Know? Meaning of Cultural Diffusion, Types and Examples Cultural diffusion is the spread of cultural values and beliefs from one place to another and from one group to another group. The mixing of culture of one nation with other nations of the world has increased due to advanced communication and technological developments. Examples of common cultural diffusions are: Spread of music throughout the world, like jazz. The popularity of sushi, a traditional Japanese dish, signifies diffusion of Japanese cuisine. English language is also an example of diffusion as it has many words which are taken from other languages. Examples of Religious Cultural Diffusion: Christianity, as a religion, started in Israel and has spread all over the globe. Islam is a popular religion which has spread recently to the entire world. Examples of Economic Cultural Diffusion: Coco-Cola products are available in all countries of the world McDonald s food chains have been opened up virtually everywhere. As an activity, think and list down some more examples of cultural diffusion. Source: The process of cultural transmission and diffusion become easy in the cultures which have high educational levels and efficient communication system. For example, in spite of low literacy rate, Indian Government is using mass media to transmit new ideas among the masses. TV and radio are being largely used to transmit important information, related to family planning, adult education, agricultural practices and techniques, and so on. It is important for a business firm to understand the nature and process of cultural transmission of a society because it has a great influence on the business decision-making. For example, while designing a promotional policy for a product or service, a business firm should be aware of different elements of transmission, effectiveness of communication media, different reference groups and the extent of their influence, and so on. Institute of Lifelong Learning, University of Delhi 7 4.4. Cultural Conformity: Cultural conformity implies individuals of a society conforming to the existing cultural norms. Each individual has a certain role in a society and cultural conformity occurs when a person conforms to the responsibilities of the required role. For example, a student is required to conform to his role obligations of dressing properly, abiding by the rules of the school, and doing his homework properly. Similarly, an employee, who is hardworking and loyal to the organization, is conforming to the expected norms. Cultural conformity is achieved when an individual incorporates his knowledge and skills, required to fulfill his obligations, and undertakes the responsibility for his actions. Managers of business firms should know the nature of cultural conformity while making important business decisions. It becomes difficult for them to market new products, services or ideas if a society blindly conforms to the existing norms. In such a scenario, special efforts would be required to change the attitudes of people Cultural Lag: William F. Ogburn introduced the concept of cultural lag which implies that various parts or elements of a culture do not change at the same rate. Since various parts are interdependent, a change in one part of a culture requires modifications or readjustments in other correlated parts of that culture. It is difficult, yet not impossible, to carry out these readjustments due to factors such as ignorance, conservative attitudes, incorrect notions and sentiments. As a result of these factors, the scope of social change gets reduced. For example, religious sentiments become a hurdle in the way of population control, even though many techniques are available for birth control. The world of international business has numerous cases of cultural lag. This implies that different markets show different levels of acceptance for a new product or idea. It is important for business managers to identify the factors leading to cultural lag and overcome them through appropriate measures. If a product is introduced in the market which is not ready to be accepted culturally, then it might cause failure to the business. Knowledge of cultural lag is, therefore, utmost significant for business decision-making. 5. Cultural Traits and its Impact on Business: India has been, for long, viewed as a country of snake charmers and elephants by many in the west, even though it is no longer true. Such perceptions, despite its rapid progress, both industrially and in the service sector, would show India as an industrially backward nation. Such perceptions can bias the approach of westerners to do business with India. Cultures can evolve over a period of time. Business representatives must understand the current cultural nuances to be effective in their roles. The understanding, how cultures in different societies influence business practices, is important in today s globalized economy. Institute of Lifelong Learning, University of Delhi 8 5.1 Low versus High Context Cultures: Low-context and High-context cultures are terms that were introduced by the anthropologist, Edward T. Hall, in his book, Beyond Culture. In low context cultures, information is communicated in a more direct manner and emphasizes the spoken word, unlike in high-context cultures which relies more on intangibles like, tone of voice, body language, gestures, postures, etc., to get the message across. A Low Context Culture emphasizes business dealings on the basis of more quantifiable and tangible criteria, such as, facts and figures, relating to performance standards, service levels, quality benchmarks, pricing, etc. Thus, business decisions will be taken on reports with detailed analysis and recommendations, based on analysis of facts. Investors will rely more on balance sheet and operational performance indicators for investment decisions. A High Context Culture will give greater credence to softer intangible aspects while dealing with business partners. Relationships are therefore important; and the factors, such as, trust, respect, attitudes, behaviors, become pivotal in generating comfort towards each other, in business negotiations. Personal interactions are important, unlike in a Low Context Culture, where negotiations may even be conducted remotely. Thus, investment decisions are more likely to be swayed by the degree of comfort, generated by the behavior of participants. Value Addition 3: Pause And Think How Relationships Impact Business? Read the link below to understand how McDonald s lost a case in court in China as it did not understand the way business would be impacted by cultural context. In the west, McDonald s could have relied on the court to enforce a legal contract; an approach that failed to work in China, as it does not have the same legal infrastructure. Personal power, connections and relationships, rather than rule of law, has always been the key to getting things done in China. McDonald s lost to the local developer due to lack of Guanxi meaning relationships. A perfect example of how a high context culture might change the way business needs to be done. Source: /Chapter-03-International-business 5.2 Neutral versus Emotional Cultures: Figure 2: Emotional Culture on Display at a Business Meeting Institute of Lifelong Learning, University of Delhi 9 The extent to which participants, in a business, interact publicly and display emotions, determine which culture they belong to whether Neutral or Emotional. People from Neutral Cultures do not openly express emotions and will remain composed and stoic during interactions. It will therefore be difficult to ascertain what they are feeling about the ensuing conversation. They may appear disinterested to others but that may not be the case. They prefer a more formal approach and would like to receive pre-reads that they can go through before they arrive at a meeting. United Kingdom and Japan are considered to be high Neutral Emotion Cultures. A neutral culture response, during a business meeting, would be- I agree with your thoughts. People from Emotional Cultures express emotions openly and will appear enthusiastic, excited and animated, in their interactions. They will smile and greet each other loudly and may often appear boisterous to their counterparts from Neutral Cultures who would do well to reciprocate warmly to create a congenial atmosphere and greater degree of comfort, during business interactions. Netherland, Switzerland and Mexico are examples of Emotional Cultures. An emotional culture response, during a business meeting, would be- I feel the same way. People, from emotional cultures, must attempt to be formal and put their thoughts on paper, when dealing with people from neutral cultures. Those from neutral cultures must respond with warmth to the animated overtures of people f
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