Page 155 - DMGT401Business Environment

Business Environment

Notes Objectives

After studying this unit, you will be able to:
Discuss the situation of poverty and unemployment in India

Assess the need for Human Development and Rural Development
Explain the need for Business Ethics and Corporate Governance
State the concept of Corporate Social Responsibility

Introduction

Society and culture primarily govern the lifestyle of an individual. An individual's eating
habits, shopping behaviour, dressing priorities, physical possessions, etc., are all influenced by
the society. Many times people spend a lot amount of money for the sake of simply to adhere to
social and cultural norms. It is only due to societal pressure that people spend so much money
in marriages, celebrations, and even on funerals. In India, expenditure on festivals like Holi,
Diwali, Id, Raksha Bandhan, Durga Puja, Ganesh Puja, Pongal, etc., runs into billions every year.
So culture itself is a big opportunity for business.

If we study Maslow's Hierarchy of Human Needs, we will find that after fulfilling physiological,
safety and security needs, it is only for social needs that a human being works. In most cases,
once social aspirations are achieved, most people remain there and seldom strive for ego and
self-actualisation needs.
When someone buys a gift for someone else, when he purchases clothes for a party or a morning
walk, when he purchases a particular model of motorcycle or automobile, when he takes
admission in a particular college/school, all of these decisions are influenced by the prevailing
societal and cultural environment.
With all these purchases, he is satisfying his social needs because he has a subconscious desire to
appear a smart and intelligent consumer and individual in the eyes of society. It has been seen
that in the case of middle class and upper class, expenditure on social needs consumers a
considerable part of their income. This ratio increases in favour of social needs as we go up the
income ladder. This is the reason most organizations try to position their products around social
needs.

7.1 Poverty in India

Poverty is one of the main issues, attracting the attention of sociologists and economists. It
indicates a condition in which a person fails to maintain a living standard adequate for a
comfortable lifestyle.
Though India boasts of a high economic growth, it is shameful that there is still large scale
poverty in India. Poverty in India can be defined as a situation when a certain section of people
are unable to fulfill their basic needs. India has the world's largest number of poor people living
in a single country. Out of its total population of more than 1 billion, 350 to 400 million people
are living below the poverty line. Nearly 75% of the poor people are in rural areas, most of them
are daily wagers, landless laborers and self employed house holders. There are a number of
reasons for poverty in India. Poverty in India can be classified into two categories namely rural
poverty and urban poverty.

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