Here's 'Social & Cultural Environment'- from Business Environment-Semester 2. Happy Learning!

1. SOCIAL & CULTURAL
ENVIRONMENT
Prof. Karishma Shetty

2. What is Social Environment?
● Social environment consists of the sum total of a society’s beliefs, customs, practices and behaviours.
Every society constructs its own social environment. Some of the customs, beliefs, practices and
behaviours are similar across cultures, and some are not. The social environment of a business can be
integral to its success or failure. It encompasses the religious aspects, language, customs, traditions,
beliefs, taste and preference, buying and consumption habits etc. Some of the customs, beliefs, practices
and behaviours are similar across cultures, and some are not. What is liked by people of one culture may
not be liked by those of some other culture. Many companies modify their products and marketing and
promotion strategies to suit the taste and preferences or other characteristics of the population.
● Business has to adopt strategies that are appropriate to the socio-cultural environment. The marketing
mix has to be designed in a manner best suited to the particular target market. The values and beliefs
associated with colour vary significantly between different cultures.

3. ● For instance, White indicates death and mourning in China and Korea, in some countries it expresses
happiness and is the colour of bridal dress. Blue colour is considered as feminine and warm in Holland but
regarded as masculine and cold in Sweden.
● Social environment is largely created by the society-at-large in which a business functions. This is referred
to as its external social environment. If a business operates in a multicultural society, then the external
social environment is even more complicated because the environment will consist of diverse sub-
populations with their own unique values, beliefs and customs.
● Business also has its own social environment. This is known as its internal social environment, which is
simply the customs, beliefs, practices and behaviours within the confines of the business. A business has
much more control over its internal social environment than it does with its external social environment.

4. External Social Environment:
A business must utilize and adapt to its social environment, or it will not survive. It should
be well aware of the society’s social preferences, needs and wants that are in turn influenced
by the population’s values, beliefs and practices. If a business does not adapt to changing
social preferences, its sales will drop, it will not survive in the market. Businesses often try to
influence societal values through the use of marketing, advertising, public relations
strategies etc.
Broader social values will also affect the success of a business. A society that values higher
education will provide a better workforce that will lead to more productivity and innovation.
Likewise, a society that supports investment in public infrastructure will have access to good
transportation, IT and communication systems.

5. Internal Social Environment:
A business also creates a social environment consisting of its own organizational values, norms, customs and practices.
Many of these values, norms and beliefs will be similar to the external social environment, but some will be unique to the
organization. Businesses need to operate as a cohesive unit, so it is important to build a strong and productive
organizational culture that is stable and positive. Thus, a business should carefully monitor the relations between its
members and constantly strive to improve them. The internal social environment of a business is also affected by current
changes in the contemporary workforce. The workforce today is different than those ten years ago. Today’s workforce is
more educated, has a higher percentage of women, more career oriented etc. They bring in their own sets of values and
beliefs with them to the workplace. A business should be able to integrate some of this diversity to make it strong.
The social environment of a business can be integral to its success or failure. Employees are often influenced by the
context in which they work and this can have implications for productivity. Some effects of the social environment are
easier to measure than others. Employers who take the necessary strides to create a positive and harmonious social
environment in the workplace become successful in the long run.

6. What is Cultural Environment?
e refers to the prevailing norms and values which guide the way people behave in a society or in an organisation. A culture is a way
a group of people their behaviours, beliefs, values, and symbols that they accept and pass along by communication and imitation
generation to the next. Cultural factors have an important impact on the flow of business. Each society has its own elements of
hese elements of culture are manifested through:
anguage verbal and non-verbal.
eligion.
alues and attitudes.
anners and customs.
es are what make countries unique. Each country has different cultural activities and cultural rituals. Culture also includes the way
ink about and understand the world and their own lives. Different countries have different cultures. Culture can also vary within a
ociety or sub group. Like, a workplace may have a specific culture that sets it apart from similar workplaces. Similarly, a region of a
may have a different culture than the rest of the country. Cultures change gradually, picking up new ideas and dropping old ones,
y of the cultures of the past have been so persistent and self-contained that the impact of a sudden change tears them apart,
g the people psychologically.
● Material elements.
● Aesthetics.
● Education.
● Social institutions.

7. Socio-Cultural Environment
The Influence exercised by social and cultural factors that are not within the control of business is known as socio- cultural environment.
Factors of Socio-Cultural Environment
Attitude of People
towards work Education
Habits and
Preferences
Languages
Urbanization
Customs and
Traditions
Family System Religion
Caste System
Business Ethics
Value System

8. Impact of Culture on Business:
The aim of business is the same everywhere, but the way to do it varies across countries.
Culture affects:
● Consumer behaviour
● Local demand
● Buying decisions
● Brand Image etc.

9. Interface between Business and Culture
-Culture creates people- Culture of TATA’s will be different from Reliance
-Culture & Globalization- Accepting ppl from different backgrounds in business
-Culture determines goods & services- Products should be manufactured accordingly
-Language & Culture- Familiarity of the language -could be speech ,written,,gestures
-Attitude-Culture determines peoples attitude - Indians working abroad .
- Ambitious - At some areas ppl are ambitious and some ppl are complacent wih lower jobs
-Education–Countries rich in education attract economic progress
-Family- Family Values - Joint family- support /Women getting independent & supporting family

10. IMPACT OF FOREIGN CULTURE ON BUSINESS
- Changing attitude of employees towards work n goals -materialistic-task
accomplishments
- Changing attitude of managers - learning all skills
- Labour mobility- search for better job
- Workforce diversity- people come together to work for a common goal
- Changing saving pattern & lifestyle- now ppl spend more on luxuries-traditional
- saved more , enjoyed less
- Distribution of time between work & leisure -travel ,entertainment industries
geared up
- Exposure of foreign culture - ways of doing work

11. Social Audit
Features :
-Voluntary
-To meet corporate Social Responsibility
- To evaluate social performance .
It involves:
(1) Identification of the firm's activities having potential social impact
(2) Assessment and evaluation of the social costs and social benefits of such activities
(3) Measurement of the social costs and benefits
(4) Reporting, that is presenting in a proper format and manner, the social performance of the firm.

12. Advantages of Social audit
- Builds corporate image
- To meet CSR
- To develop social relations
- Improves employees morale
- Customer satisfaction
- Increase in shareholders wealth
- Social development of the country

13. Business Ethics
Ethics refer to a system of moral principles a sense of right and wrong and goodness and badness of actions and their motives and
consequences. It is a set of concepts and principles that guide us in determining what behaviour helps or harms others in the
society.
Business Ethics or Corporate Ethics refer to the application of ethics to business. It is the study of good and evil, right and
wrong and just and unjust actions of businessmen. They are basically the moral principles that guide the way a business behaves.
It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics
reflects the philosophy of business, of which one aim is to determine the fundamental purposes of a company.
Some of the important factors which highlight the importance of business ethics are:
(1) Long-term growth: Sustainability comes from an ethical long-term vision which takes into account all stakeholders.
Organizations should aim for smaller but sustainable profits in the long-term.
(2) Public Image: An organization's environmental policy, the way they treat their employees and the way they treat the
communities are all part of their overall behaviour and this in turn is the principal factor in determining their public image.
(3) Cost and Risk Reduction: Companies which recognise the importance of business ethics will need to spend less in order to
protect themselves from internal and external behavioural risks as they are supported by sound governance systems.

14. Corporate Governance
● Corporate Governance is the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed,
administered or controlled. It also includes the relationships among the many players involved (the stakeholders) and the goals for which the
corporation is governed.
● The principal players are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers,
customers, banks and other lenders, regulators, the environment and the community at large.
● Corporate governance includes the processes through which corporations’ objectives are set and pursued in the context of the social,
regulatory and market environment. Governance mechanisms include monitoring the actions, policies and decisions of corporations and
their agents.
● Corporate governance practices are affected by attempts to align the interests of stakeholders.
● Corporate Governance motivates the organization to be fully informed in order to maintain or alter organizational activity.
● Organization for Economic Cooperation and Development (OECD) defines the concept as: “In a broader context, the basic purpose of
corporate governance is to maximize the long – run interests of the various stakeholders” groups and resolve the conflict, in their mutual
interests.
● India’s SEBI Committee on Corporate Governance defines corporate governance as the “acceptance by management of the inalienable rights
of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment
to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a
company.”

15. Principles of Corporate Governance
● Shareholder recognition is key to maintaining a company’s stock price. Organizations should respect the rights
of shareholders and help shareholders to exercise those rights by openly and effectively communicating
information and by encouraging shareholders to participate in general meetings
● Stakeholder interests should also be recognized by corporate governance. Organizations should recognize that
they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including
employees, investors, creditors, suppliers, local communities, customers, and policy makers.
● Role and responsibilities of the board must be clearly outlined to majority shareholders.
● Integrity and Ethical behaviour violations in favour of higher profits can cause massive civil and legal problems.
A code of conduct regarding ethical decisions should be established for all members of the board.
● Disclosure and transparency: Organizations should clarify and make publicly known the roles and
responsibilities of board and management to provide stakeholders with a level of accountability. Business
transparency is the key to promoting shareholder trust.

16. Importance of Corporate Governance:
● With globalisation vastly increasing the scale of businesses and the size and complexity of corporations, the importance of corporate
governance and internal regulation is becoming significant. Corporate governance has succeeded in attracting a good deal of public
interest because of its apparent importance for the economic health of corporations and society in general.
● The rapid pace of globalization has made the need urgent for instituting corporate governance. Public attention through high profile
corporate scandals and collapses has forced governments, regulators and boards of corporations to carefully reconsider fundamental
issues of corporate governance as essential for public economic interest.
● Good corporate governance practices are now becoming a necessity for every country and business enterprise, and are no longer
restricted to the activities of public-listed corporations in advanced industrial economies.
● The aim of “Good Corporate Governance” is to ensure commitment of the board in managing the company in a transparent manner for
maximizing long-term value of the company for its shareholders and all other partners. It integrates all the participants involved in a
process, which is economic, and at the same time social.
● The fundamental objective of corporate governance is to enhance shareholders’ value and protect the interests of other stakeholders by
improving the corporate performance and accountability. Hence it harmonizes the need for a company to strike a balance at all times
between the need to enhance shareholders’ wealth while not in any way being detrimental to the interests of the other stakeholders in the
company.
● Further, its objective is to generate an environment of trust and confidence amongst those having competing and conflicting interests. The
overall endeavour of the board should be to take the organisation forward so as to maximize long term value and shareholders’ wealth.

17. Social Responsibility of Business:
Social responsibility of business is the continuing commitment by business to behave ethically and contribute to economic development
while improving the quality of life of the workforce and their families as well as the local community and society at large. It is one of the newest
management strategies where companies try to create a positive impact on society while doing business.
Examples of CSR activities of companies:
(1) The ICICI Group established the ICICI Foundation for Inclusive Growth (ICICI Foundation) in early 2008, to lend its efforts and focus to promote
inclusive growth amongst low-income Indian households.
(2) Oil and Natural Gas Corporation Ltd. (ONGC) as a responsible corporate citizen is focused on promotion of vocational education, health care
and entrepreneurship in the community coupled with initiatives in water management and disaster relief in the country. In recognition of
these initiatives, the world council of corporate governance conferred the Golden Peacock Award to ONGC for ‘Corporate Social Responsibility
in Emerging Economies-2006’ at the 7th International Conference on Corporate Governance held in May 2006 in London.

18. Ethical behaviour and corporate social responsibility can
bring significant benefits to a business. Some of the
benefits are:
● Attract more customers, thereby boosting sales and profits.
● Reduce labour turnover and therefore increase productivity.
● Attract more employees to work for the business, reduce recruitment costs and enable the company to get
the most talented employees.
● Attract investors and keep the company’s share price high, thereby protecting the business from takeover.

19. Social Responsibilities of Business towards Shareholders:
(a) To ensure safety of investment.
(b) To ensure fair and regular return on investment.
(c) To give complete information regarding the financial position of the business.
(d) To give them opportunities to participate in decision making.
(e) To ensure appreciation of investment by proper utilization of resources.
(f) To make proper use of funds of shareholders.
(g) To take R&D activities for diversification of product line and also for facing market completions effectively.
(h) To improve the prestige of the company though growth and expansion and to give safety to the investments
of shareholders.

20. Social Responsibilities of Business towards Government:
(a) Payment of regular taxes to the government.
(b) To follow the relevant laws, rules and regulations relating to licensing, pollution control.
(c) To avoid the use of corrupt and unethical means to seek favours from government and politicians.
(d) To avoid influencing political leadership for personal gains through bribes and immoral practices.
(e) To follow fair trade practices and raise social welfare.
(f) To avoid tax evasion and avoid tax evasion at all the levels.
(g) To repay loans taken from public sector banks and financial institutions.
(h) To maintain financial transparency by disclosing all the important financial details.

21. Social Responsibilities of Business towards Customers:
(a) To provide quality goods and services at reasonable price to the customers.
(b) To avoid artificial scarcity of products and ensure equitable distribution.
(c) To conduct a survey or research to ensure the customers are happy with the products and services of the
bank.
(d) To allow for free and fair business competition and avoid the exploitation of the consumers.
(e) To maintain a close link with link with the consumers through consumer cells in order to solve their
complaints and suggestions.
(f) To honour and protect the rights of the consumers.

22. Social Responsibilities of Business towards Employees:
(a) To provide opportunities for meaningful work in the enterprises and to create a sense of loyalty towards the
enterprise.
(b) To create the conditions in which employees are able to put forward their best efforts for achieving the
objectives of enterprise.
(c) To introduce code of conduct for workers and proper machinery for maintain cordial relations.
(d) To provide security of employment so as to raise the morale and loyalty to the organization.
(e) To provide fair and just wages and allowances, welfare facilities and introduce fair work standards.
(f) To introduce schemes of participative management.
(g) To introduce impartial promotion and transfer policies for the employee force.

23. Social Responsibilities of Business towards Society:
(a) To ensure protection of environment and that the amenities of the local community neither are not
damaged.
(b) To provide better living conditions like housing, transport, canteen, crèches etc.
(c) To introduce social audit by the professionals.
(d) To provide opportunity for better career prospects and rehabilitation of population affected by any
operation of the business.
(e) To ensure regular supply of goods and services at reasonable price.
(f) To frame policies for conservation of natural resources and wildlife.
(g) To contribute to social causes like education and rural development.
(h) To provide financial support to cultural activities and thereby repay the social debt.
(i) To contribute towards economic, and national growth and stability.

24. ARGUMENTS FOR SOCIAL
RESPONSIBILITY OF BUSINESS:
● Changes Public Expectations of
Business
● Long Run Profits
● Ethical Obligation
● Public Image
● Better Environment for Business
● Avoidance of Government Regulations
● Balance of Responsibility and Power
● Stockholder Interests
● Possession of Resources
● Prevention is better than Cure
ARGUMENTS AGAINST SOCIAL
RESPONSIBILITY OF BUSINESS:
● Profit Maximization is ultimate goal
● Dilution of Purpose
● Society has to pay the cost
● Too much power
● Lack of skills
● Lack of Accountability
● Lack of Broad Support
Prof. Karishma Shetty

25. Technological Environment
Technology is a systematic application of scientific knowledge to practical task. It affects all types of business. It is a
basic component that can make the business successful or even destroy it. The rapid development of technology requires
quick reaction by businesses in order to survive in an emerging competitive environment and keep up with new trends in
the market. After the industrial revolution, the information revolution has been the most significant development in this
country. Some of the developments in the information technology were the invention of the microprocessor, personal
computer, evolution of the software and the rapid advances in the field of telecommunications.
Technological Environment
Research and
Development
Modernization
Innovation
Product Technology

26. Challenges Posed By Use Of
Technology:
● Fear of new responsibilities
● Fear of losing job
● Fear of losing customer
relationship
● Lack of training
● Compatibility and Complexity
● Confidentiality and Privacy
● Lack of Appropriate Technical
Knowledge amongst staff
Advantages of Technology to
Business:
● Cost Efficiency
● Security Systems
● Improved Customer Relationships
● Better Presentation of Financial
Results
● Emphasis of Research and
Development
● Protection of the Environment
● Improvement in Efficiency and
Productivity
● Better Climate and Culture
● Improve Competitive Advantage
● Contingency Planning

27. Competitive Environment
● Competition has a positive impact, not only on the well-being of consumers, but also on a country’s economy as a whole.
● Competition enhances the productivity and international competitiveness of the business sector and promotes dynamic
markets and economic growth.
● Competition allows for more choices, improves the quality of products through the efficient use of resources, and enhances
economic growth through increased investments. In most cases, the results of competition are almost always positive.
● The role of competition in a market economy allows multiple individuals or businesses to use resources efficiently and produce
the cheapest products at the best quality.
● Constant competition further refines a company’s use of resources and forces it to improve products and operations or suffer
the consequences.
● Competition allows new businesses to start and increase the total production output. When this occurs, natural economic
growth is the result. Individuals have better jobs and potentially higher incomes, the demand for goods and services increases,
and companies start or increase supply in order to meet the demand. The cyclical nature of a market economy allows for bigger
investment and, in turn, more growth and output.

28. Principal Benefits Of Competition:
● Competition results in goods and services being provided to consumers at competitive prices.
● Competition has effect on efficiency and productivity. Companies that are faced with vigorous competition continuously strive to
become more efficient and more productive. They offer higher quality goods, better services and lower prices.
● Competition has positive effects on innovation. In today’s technology-driven world, innovation is crucial to success. Innovation
leads to new products and new production technologies. Without competition, there would be little pressure to introduce new
products or new production methods.
● Competition fosters restructuring in sectors that have lost competitiveness. It is difficult for the government to determine which
sectors of the economy need to be restructured, which firms in those sectors should remain or should cease to exist, and when it
is best to engage in such restructuring. The competitive process forces decisions to be based on market factors, such as demand,
product uses, costs, technologies, rather than the incomplete information in the possession of government bureaucrats. The
competition for capital and other resources by firms throughout the economy leads to money and resources flowing away from
weak, uncompetitive sectors to the strong, most competitive sectors.

29. Competitor’s
Analysis
Threat of new
entrants
Bargaining
power of
suppliers
Threat of
substitute
products or
services
Bargaining
power of
buyers
Rivalry among
existing firms
The state of competition in an industry
depends on five basic competitive forces
which provides a simple perspective for
assessing and analysing the competitive
strength and position of a business
organisation. This diagram depicts the
interaction between Michael Porter’s
Five Forces:

30. (1) Threat of new entrants:
The threat of new entries will depend on the extent to which there are barriers to entry. These are typically:
● Economies of scale (minimum size requirements for profitable operations),
● High initial investments and fixed costs,
● Cost advantages of existing players due to experience curve effects of operation with fully depreciated assets,
● Brand loyalty of customers.
● Protected intellectual property like patents, licenses etc.,
● Scarcity of important resources, e.g. qualified expert staff.
● Access to raw materials is controlled by existing players,
● Distribution channels are controlled by existing players,
● Existing players have close customer relations, e.g. from long-term service contracts,
● High switching costs for customers.
● Legislation and government action.

31. (2) Threat of Substitute Products or Services:
A threat from substitutes exists if there are alternative products with lower prices of better performance parameters
for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the
potential sales volume for existing players. This category also relates to complementary products.
Similarly to the threat of new entrants, the threat of substitutes is determined by factors like:
● Brand loyalty of customers,
● Close customer relationships,
● Switching costs for customers,
● The relative price for performance of substitutes,
● Number of substitute products available in the market.
● Ease of substitution.
● Substandard product.
● Current trends.

32. (3) Bargaining Power of Customers (Buyers):
The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm
under pressure, which also affects the customer’s sensitivity to price changes. The bargaining power of customers
determines how much customers can impose pressure on margins and volumes. Firms can take measures to reduce
buyer power, such as implementing a loyalty program. The buyer power is high if the buyer has many alternatives.
Customers bargaining power is likely to be high when:
● They buy large volumes, there is a concentration of buyers,
● The supplying industry comprises a large number of small operators.
● The supplying industry operates with high fixed costs,
● The product is undifferentiated and can be replaced by substitutes,
● Switching to an alternative product is relatively simple and is not related to high costs,
● Customers have low margins and are price-sensitive,
● Customers could produce the product themselves,
● The customer knows about the production costs of the product.

33. (4) Bargaining Power of Suppliers:
The term ‘suppliers’ comprises all sources for inputs that are needed in order to provide goods or services. Supplier bargaining power
is likely to be high when:
● The market is dominated by a few large suppliers rather than a fragmented source of supply.
● There are no substitutes for the particular input.
● The suppliers’ customers are fragmented, so their bargaining power is low.
● The switching costs from one supplier to another are high.
● There is a possibility of the supplier integrating forwards in order to obtain higher prices and margins. This threat is especially
high when:
○ The buying industry has a higher profitability than the supplying industry.
○ Forward integration provides economies of scale for the supplier.
○ The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of
products).
○ The buying industry has low barriers to entry.
In such situations, the buying industry often faces a high pressure on margins from their suppliers. If we are manufacturing biscuits
and there is only one person who sells flour, we have no alternative but to buy it from them. Suppliers may refuse to work with the
firm or charge excessively high prices for unique resources. The relationship to powerful suppliers can potentially reduce strategic
options for the organization.

34. (5) Intensity of Competitive Rivalry:
For most industries the intensity of competitive rivalry is the major determinant of the competitiveness of the
industry. This force describes the intensity of competition between existing players (companies) in an industry.
High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single
company in the industry. Competition between existing players is likely to be high when:
● There are many players of about the same size.
● Players have similar strategies.
● There is not much differentiation between players and their products, hence, there is much price
competition.
● Sustainable competitive advantage through innovation.
● Competition between online and offline companies.
● Low market growth rates (growth of a particular company is possible only at the expense of a competitor).
● Barriers for exit are high (e.g. expensive and highly specialized equipment).

35. Competitive
Strategies
Competitive strategies are the methods by
which organization achieves a competitive
advantage in the market. It involves long-term
action plan that is devised to help a company gain
a competitive advantage over its rival.
Competitive strategies are essential to companies
competing in markets that are heavily saturated
with alternatives for consumers. There are
typically four types of competitive strategies that
can be implemented. A mixture of two or more of
these strategies is also possible depending on the
business’ objectives, current situation and
current market position.

36. (1) Cost Leadership Strategy:
(a) Cost leadership is a concept developed by Michael Porter, used in
business strategy.
(b) It describes the way to establish the competitive advantage.
(c) Cost leadership is a business strategy that allows a company to
become the lowest cost production company in an industry.
(d) Traditionally, businesses have two options for improving profits:
increasing sales or decreasing costs.
(e) Cost leadership strategies focus on acquiring raw materials that
are the highest quality at the lowest price.
(f) Business owners must also use the best labour to transform raw
materials into valuable consumer goods.
(g) This strategy is employed by large companies that can obtain
products cheaply through economies of scale. They turn around and
sell these cheaply purchased products to buyers, adding a minimal
markup to keep the price low.
The idea behind this strategy is to be the cheapest provider of a good
or service making it difficult for the competitors to compete in the
market. This strategy is not suitable for small businesses as it
requires economies of scale.
(2) Differentiation Strategy
(a) Business owners use competitive business strategies to
differentiate their goods or services from others in the industry.
(b) Organization can sell products at a high price as they are
unique and have special features.
(c) Companies invest huge amount in research and development
activities.
(d) Differentiation may be actual or perceived. Actual
differentiation involves creating products that are not currently
available in the economic marketplace. Perceived differentiation
takes a little more work on the part of companies. Companies
typically use advertising messages that describe a product similar
to those in the market with minor differences. This strategy
encourages consumers to differentiate the product in their minds.
Companies that use the differentiation strategy offer unique
products or services. Having a unique offering gives companies an
advantage over their competitors. Companies relying on
differentiation need to be careful to not develop easily imitated
offerings, because that can ruin the uniqueness.

37. (4) Differentiation Focus Strategy
(a) The differentiation strategy, like the low-cost focus strategy,
also focuses on a specific subset of the market.
(b) Instead of marketing a product or service as the cheapest, it’s
marketed as being unique in some way.
(c) The special customer needs of the segment mean that there
are opportunities to provide products that are clearly different
from competitors who may be targeting a broader group of
customers.
(d) By focusing on a narrow market segment, a company can
focus its efforts which may require fewer resources than
developing a product for the broad market.
For example,
(a) A company might develop a product that is specifically made
for left-handed people.
(b) Some firms may concentrate their efforts on a particular sales
channel, such as selling over the Internet only.
(3) Low-Cost Focus Strategy
(a) The low-cost focus strategy is similar to
the cost leadership strategy except that it
focuses on a niche market.
(b) Instead of marketing a product to the
entire population it is marketed to a
particular segment of the population.
(c) The aim of the strategy is to be the
cheapest provider of goods in a particular
segment of the market.

38. End of Module 3