Entrepreneurship development and Industrial Consultancy

Module 1. Entrepreneurial environment

Lesson-3
Overview of INDIAN SOCIAL, POLITICAL AND ECONOMIC SYSTEMS AND THEIR IMPLICATION FOR DECISION MAKING BY INDIVIDUAL ENTREPRENEURS, PART-2

3.1 Introduction

India is a secular country. Religion is one of the cultural variables. In India all the religions are given equal status. Religion shapes the values and beliefs of a person have an influence on entrepreneurial behaviour in general and the type of business as well as women’s participation in business in particular. There are contradictory research findings with respect to influence of religion on entrepreneurial activity. There is lack of in depth research on the relation between religion and economic and social entrepreneurship. In India it can be seen that great entrepreneurs have emerged from all different religions professed over here.

Socio-cultural environment encompasses all the variables which are not included in economic or political environment. Economic environment mainly include market variable in which people act as buyers or sellers and the main aim is production. In political environment people relate with one another as citizens and the main aim is to make executive decision and rule. The socio cultural environment include whole range of behaviors and relationships in which people engage in their private and personal lives including the characteristic of the population, age, sex, race, class values and attitudes, lifestyle and relationships.

3.1.1 Cultural factors

Culture is a phenomena exhibited by groups and this can mean society as a whole (national culture), groups within society (sub culture) or even groups of societies and nations (trans national culture) e.g. many times the word "Indian culture " is used. This implies that there are certain values and way of life that Indian societies might be sharing.

India is said to have diverse culture. India is referred to as multiracial country where different communities coexist defined by their race, ethnicity or faith. While analyzing the socio cultural environment of business, it is to be remembered that society and culture are not homogenous, but are diverse and dynamic.

Socio cultural environment and business exhibits two way impacts on each other. Business practices influence culture and culture in turn influence the business practices. Employer performs several roles while performing their business duties. Their actions are influenced by their cultural background (e.g. Tata group).

3.1.2 Social factors

The social sector is looked as one of the most important sector in the developing economies of the world. It includes many programmes and policies of the government aimed at improving the living standards of the people of that country by better availability of public services.

The social environment covers following aspects:

· Poverty and its alleviation programs
· Labor and employment
· Women and children development
· Education
· Health
· Population and family welfare
· Empowerment of disadvantageous groups
· Public committees in rural and urban areas

World Bank defines poverty in terms of hunger, lack of shelter, inability to access to medical help and education. Although India is considered as rising economy but still large number of people live below poverty line. This gives opportunities to entrepreneurs and specifically those associated with NGO to carry out their work, so as to improve the living standards of people and reduce poverty. It is necessary to provide work opportunities to people so, as to help them earn income to meet the material need and help them progress with a sense of dignity and purpose in life.

Efficient labour markets help to reduce poverty and contribute to economic growth and development. The establishment of enterprise by entrepreneurs thus facilitates employment generation.

With respect to participation of women in the workforce, it can be seen that there is quantitative increase in women’s economic participation in recent past in number of enterprises. There is also growth of women entrepreneurs in India. Large number of children is engaged in child labour. Many of them work in hazardous conditions (mines, chemicals). A well established enterprise does not lead to child exploitation in the form of child labour.

Education and health are most important social environment variables and it is government’s responsibility to ensure these adequate facilities to the people. In liberalized era in the recent past it is observed that government has withdrawn their responsibility from this sector. Private participation has increased in both the sectors. Today large number of private schools, self financed colleges and private hospitals can be seen throughout the country.

For the social factors like population and family welfare, empowerment of the socially disadvantaged group and public amenities in rural and urban areas, should be improved. Rural environment shows the influence exhibited by factors which are ‘beyond the enterprises gate’ such as attitude of people to work, attitude to wealth, family, marriage, religion, education, ethics etc. In limited sense, culture is thought to be exhibited by activities like music, festivals, drama, dance etc. But in broad sense, culture is a complex whole which includes knowledge, beliefs, art, moral laws, customs and other skills and habits learned by a person as a member of society. Culture is not based upon biology or inherited but is acquired by learning and experiences. Culture is not specific to any individual but person as a group member or as a member of organization/society share the culture. Culture passes from one generation to another.

From the enterprises point of view, culture is understood from three different levels. At the top is the national culture which is dominated and exist within the geographic boundaries of a nation. India being a very large country, there is existence of this dominant culture. Within the national culture lies the business culture. This shows the way of conducting everyday business transactions. In Indian enterprises the business culture is exhibited by activities such as priority given to age and seniority, respect of women, use of traditional dress, celebrating traditional festivals etc. Organizational and occupational culture develops within the national and business cultures. Organizational culture refers to philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes and norms which keep the organization as close knit structure and are shared by all the employees of the organization. Employees pursuing a similar profession may exhibit common culture referred to as occupational culture e.g. culture exhibited by university faculty members, non teaching staff of universities, craft people, doctors etc. Following Table 3.1 illustrates the characteristics of Indian socio cultural environment.

Table 3.1 Major Socio cultural variables of Indian Culture

Socio cultural variable	Characteristics
Administrative	Existence of impersonal bureaucratic social relations, mistrust of fellow workers, highly centralized administration, more emphasis on hierarchical status in decision making, Bureaucratic delay, less amount of delegation, dissatisfied employees
Attitude towards work and goals	General and deep seated apathy, separation of work from its results, performance of tasks without any dedication, pride or interest
Discipline and order	Lack of discipline at all levels, Lack of trust on authority, Poor superior subordinate relationships
Group Harmony	Assumption of inequality of human beings, self centered behavior, suspecting fellow employees, lack of cooperation and teamwork
Education	Mostly indifferent and highly ambiva

3.2 Micro Environmental Factors

It is possible for the business organization to exert some influence on these micro environmental forces as compared to macro environmental forces. This includes factors such as organization market, market intermediaries, suppliers of raw material, employees etc. The market consists of customers whose taste and preferences changes with time. Business enterprises have to continuously closely monitor the demands of their customs in target market. It is possible to control or modify preferences of customers through promotional techniques by business organizations. Business organizations sell their products with the help of market intermediaries. It includes wholesalers, distributors, retailers and all other middleman. It is possible to control the activities of marketing intermediaries by providing appropriate commissions, training, other financial support etc. Suppliers are individuals and organizations that provide necessary resources for manufacturing goods or providing services. They are critical to an organization’s marketing success and an important link in its value delivery system.

3.2.1 Why know business environment?

The success of any enterprise depends upon managerial decisions. Manager’s decisions are affected by environmental factors. It is therefore necessary that managers understand and evaluate the impact of environmental factors on their decisions. Sometimes rigid government laws may give rise to restrictive business environment hindering the growth of business.

The present and future viability of business is impacted by the environment. For example with change in consumer preferences and advancement in technology, the mobile manufacturing company cannot survive by manufacturing only black and white screen mobile having only limited features. The cost of capital and cost of borrowing is also influenced by government’s fiscal and monetary policy. The increased awareness about environment protection among general population force business enterprises to adopt suitable non hazardous / non polluting measures in their establishment.

The environment also offers the new growth opportunities. For example the privatization policy of government of India has opened up many sectors for business organizations such as telecom, food and dairy etc.

The environmental study helps the business enterprises in development of broad strategies and long term policies for the enterprise. It helps in development of action plans to keep pace with technological improvements. It helps to foresee the impact of socio economic changes at both national & international level on the enterprises stability. It also helps in analyzing the competitors move and then formulate counter strategies.

A country’s cultural and social back ground and the prevailing political system have influence on the entrepreneurial activities. According to Gibb, enterprise culture is a set of attitudes, values and beliefs operating within a particular community or environment that lead to enterprising behavior and aspiration towards self employment.

Research studies have indicated that cultural attitudes influence the entrepreneurial activities. The cultural difference across the nations is also responsible for economic and entrepreneurial development of the nation. Cultural environment which respects and values entrepreneurship is more conducive to entrepreneurship.