Social Analysis is the third part of "PEST analysis" in Macro Environments and factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors are as follows:
1. Demographics
a. The size of the people (body size): For example, if you sell clothes, you can not sell the same size of clothes both in western and Asian countries. You must have different size, up to your market.
b. Single or married or divorced: Is your product for single people or family? For example, if you sell refrigerator, who will you target? Family or single? Must be bigger size for family than single people. If you have legal firm, you can focus on Divorced case, where there is high divorce.
c. Population growth rate; if your product is for baby or child, it would be good for you to go to a country where there is high birth rate.
d. Age distribution; what age do you target? Older people? Baby boomers?
e. Career attitudes: What kind of job the local people wants to take? Permanent? Or temporary? Then, how do you want to employ? You want to get experience curve advantage? Then, you should go where people are permanent employment oriented.
2. Class structure
In class structure, we can see as High class, middle class and lower class. For example, where there is big gap between the poor and the rich, there will be smaller middle class, then, if you want to sell luxury product in this country, you may not have as good sales as you want.
3. Education
How good is their education? The higher is the better. Where there is low education, If your company required skilled workers, it may not be a good market for you. But if you want run such factory as garment, leather and so on, it may be a good base for your factory.
4. Culture (gender roles, etc.):
It is the core element in international business. Wherever you go, you must respect their culture. However big you are, you must co-ordinate with the host country people so that you can run your business with the local people, government authorities. If you don’t respect their culture, I hope, no government will allow your business in their country. So it is worth to learn about the culture first before going into another country for business.
One example: One difference between American and Japanese business culture is that, the Japanese like to build trust and relationship before committing any business but American people prefer to get right to the business.
5. Emphasis on safety:
How safety conscious are they? Then, think about your business? Is it hazardous? You must provide them with equipment to make them feel safe.
6. Entrepreneurial spirit:
How willing these local people are to do new businesses. Are they willing to work with you as a new company? Can you hire local entrepreneur spirited person for your business? It is important how they think. If they are a kind of satisfied (content) with anything they have (like Budhist Teaching), they may not have a drive to run your business more dynamic.
7. Attitudes
How is their way of thinking? Is it ok with your company vision, company culture? What is their attitude towards foreigners, foreign products, and foreign business? How concerned they are about health and environment? These are you need to know because your business will be among them.
8. Leisure interests
How do they want to spend their holidays? What they want to do during their holidays? If your business is tourism or travel, it is vitally important for you to know. Or even if you are not in this, are you ok with their way of enjoying their holidays?
These analysis are not confined to any particular business, it is for all. So, some elements that are disadvantages to some company can be advantages to other companies. It is up to your business model and type of business.
1. Demographics
a. The size of the people (body size): For example, if you sell clothes, you can not sell the same size of clothes both in western and Asian countries. You must have different size, up to your market.
b. Single or married or divorced: Is your product for single people or family? For example, if you sell refrigerator, who will you target? Family or single? Must be bigger size for family than single people. If you have legal firm, you can focus on Divorced case, where there is high divorce.
c. Population growth rate; if your product is for baby or child, it would be good for you to go to a country where there is high birth rate.
d. Age distribution; what age do you target? Older people? Baby boomers?
e. Career attitudes: What kind of job the local people wants to take? Permanent? Or temporary? Then, how do you want to employ? You want to get experience curve advantage? Then, you should go where people are permanent employment oriented.
2. Class structure
In class structure, we can see as High class, middle class and lower class. For example, where there is big gap between the poor and the rich, there will be smaller middle class, then, if you want to sell luxury product in this country, you may not have as good sales as you want.
3. Education
How good is their education? The higher is the better. Where there is low education, If your company required skilled workers, it may not be a good market for you. But if you want run such factory as garment, leather and so on, it may be a good base for your factory.
4. Culture (gender roles, etc.):
It is the core element in international business. Wherever you go, you must respect their culture. However big you are, you must co-ordinate with the host country people so that you can run your business with the local people, government authorities. If you don’t respect their culture, I hope, no government will allow your business in their country. So it is worth to learn about the culture first before going into another country for business.
One example: One difference between American and Japanese business culture is that, the Japanese like to build trust and relationship before committing any business but American people prefer to get right to the business.
5. Emphasis on safety:
How safety conscious are they? Then, think about your business? Is it hazardous? You must provide them with equipment to make them feel safe.
6. Entrepreneurial spirit:
How willing these local people are to do new businesses. Are they willing to work with you as a new company? Can you hire local entrepreneur spirited person for your business? It is important how they think. If they are a kind of satisfied (content) with anything they have (like Budhist Teaching), they may not have a drive to run your business more dynamic.
7. Attitudes
How is their way of thinking? Is it ok with your company vision, company culture? What is their attitude towards foreigners, foreign products, and foreign business? How concerned they are about health and environment? These are you need to know because your business will be among them.
8. Leisure interests
How do they want to spend their holidays? What they want to do during their holidays? If your business is tourism or travel, it is vitally important for you to know. Or even if you are not in this, are you ok with their way of enjoying their holidays?
These analysis are not confined to any particular business, it is for all. So, some elements that are disadvantages to some company can be advantages to other companies. It is up to your business model and type of business.
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