MGT 206: Business Environment in Nepal

Socio-Cultural
Environment

BIM-6
College of Applied Business

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 Socio-Cultural Environment: Content
 Components of socio-cultural environment,
 Family structure and social organizations,
 Class structure and classification,
 Socio-cultural changes and their effects on business.

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 Socio-Cultural Environment
Elements of Social Environment
a) Demographics
• human population – its composition and distribution, size,
growth, age mix, ageing; urbanization, migration; minorities,
ethnicity, etc.
b) Social institutions
• Family – relation by blood, marriage or adoption; reside
together
• Reference groups – groups that have direct or indirect
influence on behavior, values or attitude of customers
(personalities of sports, art, musical, cinema; professionally
successful people); influence organization by influencing
product and brand choices by exposing to new values,
attitudes or behavior
• Social class – upper/middle/lower ranking by society;
members of a class share similar values, interests and
behavior
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 Socio-Cultural Environment
c) Pressure groups
• Special interest groups – advance or protect their interest that
is of social concern; put pressure and lobby government or
organization for change in laws, policies and practices to
protect their interests (e.g. consumerism, environment, human
rights etc)
d) Social change and mobility
• Modification in relationships and behavior pattern in a society;
change in life style and social values promote change, e.g.,
quality of life issues, growing environment concern, women
entering job market (social mobility)

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 Socio-Cultural Environment
Cultural Environment
Culture – complex whole which includes customs, traditions,
norms, values, beliefs, religion, language, symbols, works of
arts and architecture, shared knowledge
Created by society and handed down from generation to
generation; learned behavior; changes over time
Cross-cultural changes/issues brought about by globalization and
IT revolution exerting significant influences
Culture influences organization by
a) Influencing type of products, e.g. type of clothing worn,
building styles and materials
b) Creating attitudes to work and leisure – differs from one
culture to another, e.g., profit motivation, work units
c) Influencing values and beliefs – culture shapes people’s
views of themselves and other people and organization
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 Business, Society and Culture

Business

Society

Culture

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Society and Culture

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 Society and Culture
Society Culture
Society is self-contained, Culture is created by human
self-sufficient population beings to shape their behavior.
united by social Culture is learned, shared and
relationships, bounded transmitted from one generation
from other populations to the next.
by geographic location Culture is primarily passed on
from parents to children, but
also transmitted from
organizations, interest groups,
schools, churches etc.

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 Elements of Culture
 Language – it is the medium of conveying the information
and ideas. It can be verbal or written. Knowledge of other
language may be great advantage.
 Religion – is the system of shared beliefs and rituals. It
influences work style, values, beliefs and attitude.
 Values, norms and attitude – conviction about what is
right, good or desirable; norms are the social rules and
guidelines that prescribe appropriate behavior.
 Education – the level of formal and informal education
 Customs – established practices
 Social structure – individual, group, institutions, classes
and caste.

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 Socio-Cultural Environment
 Refers to influence exercised by certain social and cultural
factors which are beyond the control of business unit.
• Social environment: influence exercised by certain social
institutions and social systems (family, caste system,
marriage, religion, etc).
• Cultural environment: influence exercised by cultural
factors like people’s attitude to work, customs, value
system, habits and preferences, education, language, etc.
 Both are related to each other and their relationship is so
intense that their separate effect on business cannot be
measured rigidly.

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 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.
• The beliefs, values and norms of a society determine
how individuals and organizations should be inter-related.
e.g., improvement in education level affects the lifestyle
and thinking of persons living in society.
• With advancement of education, impact of casteism has
reduced, mobility of people has increased, the role of
women in society has also changed because of their level
of education.

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Components of Social Environment

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 Demographics
• Concerned with human population and its distribution.
• Includes the population size, age, urbanization and
migration of population.

2011
Population size 26,494,504
Terai 50.37%
Hill 43%
Mountain 6.73%
Urban population 58 municipalities (17%)
Population growth rate 1.35%
Source: National Population and Health Census 2012

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 Basic Social Structure and Institutions
Social Structure:
• a set of interrelated social institutions developed by
human beings to impose constraints on human interaction
for the purpose of survival and well being.
Social institutions:
• refers to network of social relationships which are created
among human beings when they interact with each other.
• are patterned ways of solving the problems and meeting
the requirements of a particular society or another term
for society.

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Components of Social Structure and Institutions

Family
• An institution based on kinship
• Sometimes families are referred
to as households.
• Joint family to nuclear family
trends are changing.
• Education, employment
opportunities, lifestyle

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Components of Social Structure and Institutions

Joint family: Nuclear family:

• Group of people who • Increase in demand of
generally live under one consumer durables
roof, who hold property in • Increase in status of women
common. • Spend more on child
• More burden on education, household
hardworking family appliances, entertainment,
members while lethargic tourism, fast food, etc
members simply enjoy • Provide opportunity for food
• Less independence processing industry, day-care
• Low status of women. centers, coaching classes,
educational institutions, big
malls, etc.

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Components of Social Structure and Institutions
Reference groups:
• Groups in which individuals would like to belong and
identify with its values and beliefs.
• Promote new behavior and life style, and influence values
and attitudes toward business and their products.
• Can be direct (e.g., family and friends) and indirect
reference groups (e.g., sports, musical and movie
personalities); they serve as role model for Nepalese
customers.

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 Socio-Cultural Environment
Social class:
• Social class (or simply "class") is set of concepts in
which people are grouped into a set of hierarchical social
categories, the most common being the upper, middle,
and lower classes.
• Reflects income, occupations, education and area of
residence.
• The purchasing power, lifestyle, tendency, interest,
behavior, etc. differ according to class of people

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 Social Class
Affluent/Upper class:
• Social class composed of those who are wealthy, well-born,
or both. This group can afford high-priced commodities.
Middle class:
• Represented by professional people (doctors, managers,
servants, engineers, professors, lawyers, traders, etc)
• It happens due to growth in education, business activities in
urban areas and foreign employment.
Lower middle class:
• People with little education and who have some extra source
of earning.
Poor:
• People with low purchasing power. Almost half of Nepalese
population are very poor. e.g., manual workers, lower level
employees.

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Components of Cultural Environment

Attitudes
Religion
and Beliefs

Language Education

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 1. Attitude and Beliefs
 Beliefs: descriptive thoughts held about something based
on knowledge, opinion or faith. e.g., buying new clothes on
Monday is bad luck, empty water in the morning, believe in fate
rather than hard work and efforts
 Values: Beliefs regarding what is right and what is wrong.
One value system may allow the use of corruption/wrong
practices to flourish in the business while another may be
against such practices.
 Attitude: any affective reaction to a person, object, idea or
activity. e.g., attitude of people towards work in organization
such as time, duty and morality

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 2. Religion and Caste
• Major influence for shaping the attitudes, beliefs, motivations
and values of a culture.
• Ethnic group of Nepali culture are Hindu groups, Buddhist,
the ethnic/tribal groups, Muslims and others such as
Marwadi, Bengali, Christians
• Some religion restricts their followers from doing particular
type of business
• Affects decisions on nature of business, working hours, time
for purchasing new clothes, food habits, dress style,
travelling, etc.

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 Religion and Caste (contd.)
Hindu society is stratified into 4 varnas:
Brahmins (priests), Kshatriyas (rulers), Vaishyas (traders and
farmers), Sudra (manual labor)
Hierarchy is the principal theme of the caste framework.
Religion (10 major types)
Hinduism: 81.3%, Buddhism: 9.0%, Islam: 4.45%,
Kirat: 3.1%, Christianity: 1.4%, etc.
Caste/ethnicity (125 types)
Chhetri: 16.65%, Brahman: 12.2%, Magar: 7.1%, Tharu:6.65%
Tamang: 5.8%, Newar: 5%, Kami: 4.8%
• In Islam religion, the banks do not pay interest to depositors; rather,
banks distribute a part of their profits to the depositors.
• Christians do not consume non-vegetarian food during 24 days
preceding Christmas.
• Hindus believe in sacrificing animals during Dashain.
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 3. Language
• Important in information gathering and evaluation; provides
access to local society
• Medium of communication important for business manager
• English languages are also used in foreign mission, foreign
trade, etc.
• Nepali language has the largest number of speakers; mother
tongue of 44.6% of the population; however, the ratio of those
speaking it as a mother tongue is lower than in the previous
census when it was 48.8%
Types of languages in Nepal: 123 languages spoken as mother
tongue
Nepali: 44.65%, Maithali: 11.7%, Bhojpuri: 6.05%, Tharu: 5.85%,
Tamang: 5.1%, Newari: 3.2%

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 4. Education
Common yardsticks to measure formal education:
 Enrollments in primary, secondary and tertiary levels
 Number and kinds of such institutions
 Types of courses offered
 The amount per capita spent on education; comprises of
school education (primary, secondary, higher), vocational
and technical education

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 Education
Literacy rate High education level
• Helps business firm to decide • Affects specific skills, abilities
on the type of media to employ, and methods of thinking of
at what level they should managers, technicians and
prepare ads, labels, displays, workers
manuals etc. • Affects entire staffing function,
basic organization structure,
Literacy rate in Nepal: work specialization, and
• Aged 5 years and above: overall productivity of the firm.
65.9% increased • Increased expectation of
• Male: 75.1%, Female: 57.4% workers and increased job
• Highest literacy rate is in mobility.
Kathmandu district (86.3%),
lowest in Rautahat (41.7%)

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 Education
Higher education in Nepal
• Tribhuvan University • People become more rational
• Kathmandu University and aware and cannot be easily
• cheated or fooled by business
Pokhara University
firm
• Purbanchal University
• Educated consumers demand
• Affiliations to foreign good quality products/services.
universities • Education results in skill
formation and increase income
earning ability.

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Broadening Base of Nepalese Business Sector
 Middle class house makers
 Shift in lifestyles
 Urban teenagers
 Nuclear family market
 Internal tourism

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 Impact of Socio-cultural Values on Business
Management practices
• Business firms may follow either autocratic or democratic style
of management while making decision; discourage or encourage
employee participation, strategy-driven or ….
Work attitudes
• Attitudes of Nepalese toward work are very conservative; prefer
to postpone deadlines aaja hoina bholi (mostly in government
organizations), avoid taking risks, low accountability in
accomplishing tasks qualitatively, chalta hai, etc
Business ethics
• Corruption and bribery common among Nepalese business
organization
• Exploitation, discrimination in employment, appraisals,
compensation
• Lack of ethical dealings and poor CSR
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 Impact of Socio-cultural Values on Business
Change management
• Environment adaptation is necessary within an organization.
People generally resist change in the new system.
Entrepreneurship:
• Earlier, people were hesitant to start new ventures and take
risk; and professional people were likely to stay with fixed
salary in office jobs.
• Today, risk taking in new ventures growing slowly
• Encouraging women entrepreneur
• Changes in the belief that only Newar people are traders;
people of other castes also motivated and encouraged to
become entrepreneurs.

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