aditiverma123
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hi I am an International business student from amity
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Country of Origin Effects
COUNTRY OF ORIGIN
According to Wang and Lamb (1983), “country of origin effects are intangible barriers to enter new markets in the form of negative consumer bias toward imported products.” Johansson et al. (1985) and Ozsomer and Cavusgil (1991) define country of origin as the country where corporate headquarters of the company marketing the product or brand is located. Typically, this is the home country for a company. Country of origin is inherent in certain brands. IBM and Sony, for example, imply US and japanese origins, respectively (Samiee, 1994). Bilkey and Nes (1982), Cattin et al., (1982), Han and Terpstra (1988), Lee and Schaninger (1996), Papadopoulos (1993) and White (1979), define the product’s country of origin as “the country of manufacture or assembly”. It refers to the final point of manufacture, which can be the same as the headquarters for a company.
According to Samiee (1994) “country of manufacture pertains to firms that maintains a relatively large global network of operations or do business with a variety of suppliers, e.g., contract manufacturing” (p. 581). While, Bannister and Saunders 1978), Chasin and Jaffe (1979) and Nagashima (1970, 1977) used the term “made in——” to define the country of origin of the product. In the modern marketplace defining the country of origin can be a very complicated task. The growth of multinational companies and the evaluation of hybrid products, with components from many source countries, have in many cases blurred the accuracy or validity of “made in ——” labels (Baker and Michie, 1995; Baughn and Yaprak, 1993; Chao, 1993; Yaprak and Baughn, 1991). For example, Sony is a Japanese manufacturer but some of its products are assembled outside Japan in countries like Singapore (Baker and Michie, 1995). With this example, the product assembled in Singapore would be denoted “assembled in Singapore” and that assembled in Japan would be considered as “made in Japan”.
Product evaluation
Schooler (1965) conducted a study in Guatemala with the simplest of manipulations. Schooler’s manipulation involved presenting four groups of 200 respondents of part-time students with a juice product and a swatch of fabric. These products bore fictitious labels denoting four different South American countries.
The study showed that products made in less developed countries were not evaluated as quality products. Consumers were biased for or against products from a less developed country when they were evaluating products made in different, less developed countries. Schooler (1965) found that Guatemalan students gave lower evaluations to products made in El Salvador and Costa Rica than to domestic and Mexican products and that this bias was related to a general negative attitude toward people from the former two countries. Schooler (1965) concluded that the country of origin of a product can have an effect on a consumer’s opinion of the product. Reierson (1966) tried to determine the attitude of American consumers toward foreign products.
105 business administration students and 50 psychology students were asked to indicate their opinions of products from ten different nations:
1 USA.
2 Germany.
3 Japan.
4 France.
5 Canada.
6 Italy.
7 UK.
8 Sweden.
9 Belgium.
10 Denmark.
Products were mechanical, food, and fashion merchandise. Reierson (1966) found that stereotyping of foreign products was present among the American students. Reierson (1967) continued his work of investigating American students’ attitudes towards foreign products and concluded that if the “prejudice of consumers toward a nation’s product is not too intense, consumers’ attitude may be made significantly more favorable by even slight exposure to communication and promotional devices” (p. 386). Schooler and Wildt (1968) measured the elasticity of product bias and 236 student respondents were selected randomly and divided into six groups. Each group examined two pieces of glassware, one of which was labelled as American, and the other as Japanese. The labels were authentic, but the products were identical pieces of a domestic manufacturer. Subjects were asked to indicate a purchase preference. Schooler and Wildt (1968) noticed that many American consumers were biased against Japanese products because of their national origin. In 1969 Schooler and Sunoo investigated the consumer’s perception of international products: regional versus national labeling. The purpose of the study was to determine how consumers responded to the manufactured goods of developing areas if the products were labelled regionally. The findings of the study did not how any evidence of bias against the manufactured goods which were labelled regionally. He concluded that “regional labeling might work to reduce intraregional product bias. In his follow-up study, Schooler (1971) attempted to test bias phenomena with a broadly-based representative consumer sample. The results showed significant differences towards products of foreign origin, and a hierarchy of bias effect was observed. In addition, the results indicated that neither national nor regional labelling appeared to be more effective than the other. The products of Germany were rated better than those of Asia, India and Western Europe. On the other hand, US products also were rated better than those of India and Western Europe.
Schooler (1971) concluded the following:
• The older age group rated the products of Asia, Africa, West Germany and North America lower than the younger age group.
• Females evaluated foreign products higher than males.
• Educational level and intensity of bias were observed. Consumers with a high level of education were more in favour of foreign products than those with limited education.
• The group composed of non-white people evaluated products from Africa, Latin America and India better than the group of white people.
• The white group evaluated the products of US and North America better than nonwhite.
Nagashima (1970) compared Japanese and American attitudes toward foreign and domestic products by using the semantic differential method. The purpose of the study was to measure the cross-cultural image of “made in” products as produced by US and Japanese businesses. The study consisted of a random sample of 230 Minnesota businesses chosen from the Minnesota Directory of Manufacturers and 100 Tokyo businesses chosen from the Tokyo Directory of Companies.
Countries used were USA, Japan, Germany, UK, France, Italy, Switzerland, and Canada.
The questions were carefully translated into Japanese making sure that the associative value of the language was not lost in the translation.
In 1984, Erickson, et al. (1984) analysed the country of origin effects on the evaluation of automobile brands. Data were collected from 96 MBA students at the University of Washington. Subjects were asked about their beliefs and attitudes towards ten automobile models (e.g. four US, two German and four Japanese models). Semantic differential scales were used for all rating questions used in the questionnaire. Respondents were also asked to rate their familiarity with each auto, after which they provided an overall rating on a five-point semantic scale.
The empirical results indicated that country of origin affects beliefs but not attitudes. The authors argued that the study demonstrated that image variables also affect beliefs through inferences made by consumers: “It also indicated that the effect of image variables on attitude was not direct; any influence they have appeared to be a secondary one acting through beliefs” (Erickson, et al., 1984).
Morello (1984) did a comparative research on the image of domestic and foreign products. The purpose of his study was to determine what the relationship is between the image of a country and the image of the products “made in” that country. Seven countries were used in the study, namely:
1 Belgium.
2 France.
3 Holland.
4 Italy.
5 Spain.
6 USA.
7 USSR.
8 West Germany.
Morello (1984) asked a Dutch group of 29 students and an Italian group of 37 students to rate the products from the eight selected countries using 12 sets of bipolar adjectives. The results indicated a significant relationship between these two images and the research concluded that a country of origin effect does exist and may affect consumer
buying behaviour.
Effect of crisis in country of origin
The research that has provided information about tourism crises has concentrated on providing typologies of crises, examining popular perceptions of major events and studying the effects on particular sectors and destinations. The effects of terrorist incidents and political instability have been a particular focus of attention
A study on the effect of foot and mouth disease and September 11, on the tourism industry in Scotland revels that country of origin certainly have an effect on the behavior of consumers.
The first case of foot and mouth disease (FMD) occurred in the north of England in February 2001 and tourism demand in Scotland was mainly affected from the spring onwards. Recovery was subsequently forestalled by the events of September 11
At first sight, it might appear that FMD and the September 11 events resulted in considerable downturns in US, French and German tourism demand in Scotland. FMD occurred in the first quarter of 2001, followed by the US events in the third quarter. As the main effects of FMD were felt in the second and third quarters of the year, it is useful to compare tourist demand in the second and third quarters of 2001 with demand in the same quarters of preceding years.
A forecasting model was used to estimate the responsiveness of tourism demand to changes in economic variables that occurred prior to the crises of FMD and September 11. It was then used to predict the levels of tourism demand in Scotland that would have occurred in the presence of changes in prices, exchange rates and income but in the absence of the two crises.
The difference between the numbers of actual arrivals and predicted arrivals of tourists provided an estimate of the effects of the crisis. In the US case, arrivals decreased by 20.6% in the third quarter of 2001 relative to the number predicted to arrive if the crisis had not taken place but given the changes in the other economic variables that occurred in the crisis period.
In the case of tourism from the USA, arrivals in the third quarter decreased by 5.3% compared with the previous summer and by 10.3% compared with the average of the five previous quarters. (L. Eugenio-Martina, 2004)
Comparison of the US results with those for French tourists shows a very different picture. In this case, both arrivals and receipts decreased dramatically. The number of arrivals fell by over 50% because of FMD. Receipts decreased by 39.3% with respect to the five previous years and by 31.6% (the FMD effect) with respect to the predicted value. Arrivals from Germany were also affected considerably. The number of visitors fell by 25% relative to the average of the previous five summers and by 22% relative to the predicted number.
The effects of the September 11 crisis were estimated.
In the case of US tourist arrivals in Scotland, there were immediate negative effects during the fourth quarter, with decreases of 16.3% relative to the average of the five previous years and 26.3% relative to the predicted numbers. In contrast, the numbers of arrivals during the first quarter of 2002 were virtually unaltered. A particularly severe effect occurred in the third quarter of 2002 with decreases of 14.5% relative to the five previous years and 27.3% relative to the predicted number.
Tourists from different countries respond differently to tourism crises and the messages that should be communicated to them should differ accordingly.
This paper considered the responses of tourists to Scotland from the USA, France and Germany to two different types of crisis - foot and mouth disease and September 11. The results from the model showed that tourists from different countries do; indeed, respond differently to different types of events.
How does COO Effects Medical tourism?
When a person decides to get medical treatment he assures that he gets the best treatment that is available within the limit of his resources. Medical tourism involves the patient from one country to travel to some other country where he can get his treatment at a lower cost but not necessarily under poor quality standards.
When it comes to health, sometimes the price factor can be ignored. The person will look for the best possible alternative where he gets high quality standards and hygienic and technologically sound facilities.
When selecting a medical tourist destination he will look at all the factors that will be discussed below and make sure that he is not exposed to any kind of threat while visiting the country, that risk can be of poor hygiene standards, unskilled manpower, political and legal interferences and instabilities in the country, fear of terrorist attack, pollution, infrastructure etc.
When the medical tourist destination is a developing country like India, people have their perceptions about it being a not so developed country and can question its ability to provide top-notch facilities and treatment and may not want to visit India for a medical treatment. However the fact is that India can provide medical services equivalent to the most developed nations in the world. It has state of the art facilities and infrastructure, highly skilled doctors and nurses, which not only serve in India but also in many of the heading hospitals across the world. The government of India also supports and provides all kinds of comforts and benefits to patients who would like to visit India for medical treatment.
The Factors that affect the Country of Origin can be classified as follows:
Poilitcal and Legal
Economic
Social and cultural
Demographic
Technological
Demographic environment
Factors that have to be considered under demographic environment are, population, size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns; and regional characteristics and movements.
Economic environment
Nations vary greatly in level and distribution of income and industrial structure. There are four types of industrial structures: subsistence economies, which have few opportunities for marketers; raw material exporting economies like Zaire ( copper) and Saudi Arabia (oil) with good markets for equipment, tools, supplies, and luxury goods for the rich; industrializing economies, like India, Egypt and the Philippines where a new rich class and a growing middle class demand new types of goods.
People often distinguish countries with five different income-distribution patterns: (1) mostly low incomes; (2) very low incomes; (3) very low, very high incomes; (4) low, medium, high incomes and (5) mostly medium incomes.
Natural environment
The deterioration of the natural environment is a major global concern. In many world cities, air and water pollution have reached dangerous levels. There is a great concern about “ greenhouse gases” in the atmosphere due to burning if fossil fuels, about the depletion of the ozone layer due to certain chemical, and about growing shortages of water.
Technological environment
One of the most dramatic forces shaping people’s lives is technology. Technology has releases such wonders as penicillin, open-heart surgery, and the birth control pill. It has released such horrors like the hydrogen bomb, nerve gas, and the submachine gun.
Every new technology is a force for “creative destruction”. Transistors hurt the vacuum-tube industry, xerography hurt the carbon paper business, and autos hurt the railroads and televisions hurt the newspapers. Instead of moving into the new technologies many old industries fought or ignored them, and their businesses declined.
Unlimited opportunities for innovation
Scientists today are working on a startling range of new technologies that will revolutionize products and production processes. Some of the most exciting work is being done in biotechnology, computers, microelectronics, telecommunications, robotics and designer materials. Researchers are working on AIDS cures, happiness pills, painkillers, totally safe contraceptives, and nonfattening foods.
Increased regulation of technological change
As products become more complex, the public needs to be assured of their safety. Consequently, government agencies’ powers to investigate and ban potentially unsafe products have been expanded.
Political legal environment
Decisions are strongly affected by the developments in the political and legal scenario.
This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals, sometimes these laws also create new opportunities for business.
Socio-cultural environment
Society shapes our beliefs, values and norms. People absorb, almost unconsciously a worldview that defines their relationships to themselves, to others, to organizations, to society, to nature, and to the universe.
1. Views of themselves: people vary in the relative emphasis they place on self-gratification. Today some people are adopting more conservative behaviors and ambitions.
2. Views of others: people are concerned about the homeless, crime, and victims, and other social problems. They would like to live in a more humane society. At the same time people are seeking out there “own kind” and avoiding strangers. they hunger for serious and long-lasting relationships with few others. These trends portend a growing market for social-support products and services that promote direct relations between human beings, such as health clubs, cruises, and religious activity.
3. views of organizations: people vary in their attitudes toward corporations, government agencies, trade unions, and other organizations. Most people are willing to work for these organizations, but there has been an overall decline in organizational loyalty. The massive wave of company downsizings had bred cynicism and distrust. Many people today see work not as source of satisfaction, but as a required chore to earn money to enjoy their nonwork hours.
COUNTRY OF ORIGIN
According to Wang and Lamb (1983), “country of origin effects are intangible barriers to enter new markets in the form of negative consumer bias toward imported products.” Johansson et al. (1985) and Ozsomer and Cavusgil (1991) define country of origin as the country where corporate headquarters of the company marketing the product or brand is located. Typically, this is the home country for a company. Country of origin is inherent in certain brands. IBM and Sony, for example, imply US and japanese origins, respectively (Samiee, 1994). Bilkey and Nes (1982), Cattin et al., (1982), Han and Terpstra (1988), Lee and Schaninger (1996), Papadopoulos (1993) and White (1979), define the product’s country of origin as “the country of manufacture or assembly”. It refers to the final point of manufacture, which can be the same as the headquarters for a company.
According to Samiee (1994) “country of manufacture pertains to firms that maintains a relatively large global network of operations or do business with a variety of suppliers, e.g., contract manufacturing” (p. 581). While, Bannister and Saunders 1978), Chasin and Jaffe (1979) and Nagashima (1970, 1977) used the term “made in——” to define the country of origin of the product. In the modern marketplace defining the country of origin can be a very complicated task. The growth of multinational companies and the evaluation of hybrid products, with components from many source countries, have in many cases blurred the accuracy or validity of “made in ——” labels (Baker and Michie, 1995; Baughn and Yaprak, 1993; Chao, 1993; Yaprak and Baughn, 1991). For example, Sony is a Japanese manufacturer but some of its products are assembled outside Japan in countries like Singapore (Baker and Michie, 1995). With this example, the product assembled in Singapore would be denoted “assembled in Singapore” and that assembled in Japan would be considered as “made in Japan”.
Product evaluation
Schooler (1965) conducted a study in Guatemala with the simplest of manipulations. Schooler’s manipulation involved presenting four groups of 200 respondents of part-time students with a juice product and a swatch of fabric. These products bore fictitious labels denoting four different South American countries.
The study showed that products made in less developed countries were not evaluated as quality products. Consumers were biased for or against products from a less developed country when they were evaluating products made in different, less developed countries. Schooler (1965) found that Guatemalan students gave lower evaluations to products made in El Salvador and Costa Rica than to domestic and Mexican products and that this bias was related to a general negative attitude toward people from the former two countries. Schooler (1965) concluded that the country of origin of a product can have an effect on a consumer’s opinion of the product. Reierson (1966) tried to determine the attitude of American consumers toward foreign products.
105 business administration students and 50 psychology students were asked to indicate their opinions of products from ten different nations:
1 USA.
2 Germany.
3 Japan.
4 France.
5 Canada.
6 Italy.
7 UK.
8 Sweden.
9 Belgium.
10 Denmark.
Products were mechanical, food, and fashion merchandise. Reierson (1966) found that stereotyping of foreign products was present among the American students. Reierson (1967) continued his work of investigating American students’ attitudes towards foreign products and concluded that if the “prejudice of consumers toward a nation’s product is not too intense, consumers’ attitude may be made significantly more favorable by even slight exposure to communication and promotional devices” (p. 386). Schooler and Wildt (1968) measured the elasticity of product bias and 236 student respondents were selected randomly and divided into six groups. Each group examined two pieces of glassware, one of which was labelled as American, and the other as Japanese. The labels were authentic, but the products were identical pieces of a domestic manufacturer. Subjects were asked to indicate a purchase preference. Schooler and Wildt (1968) noticed that many American consumers were biased against Japanese products because of their national origin. In 1969 Schooler and Sunoo investigated the consumer’s perception of international products: regional versus national labeling. The purpose of the study was to determine how consumers responded to the manufactured goods of developing areas if the products were labelled regionally. The findings of the study did not how any evidence of bias against the manufactured goods which were labelled regionally. He concluded that “regional labeling might work to reduce intraregional product bias. In his follow-up study, Schooler (1971) attempted to test bias phenomena with a broadly-based representative consumer sample. The results showed significant differences towards products of foreign origin, and a hierarchy of bias effect was observed. In addition, the results indicated that neither national nor regional labelling appeared to be more effective than the other. The products of Germany were rated better than those of Asia, India and Western Europe. On the other hand, US products also were rated better than those of India and Western Europe.
Schooler (1971) concluded the following:
• The older age group rated the products of Asia, Africa, West Germany and North America lower than the younger age group.
• Females evaluated foreign products higher than males.
• Educational level and intensity of bias were observed. Consumers with a high level of education were more in favour of foreign products than those with limited education.
• The group composed of non-white people evaluated products from Africa, Latin America and India better than the group of white people.
• The white group evaluated the products of US and North America better than nonwhite.
Nagashima (1970) compared Japanese and American attitudes toward foreign and domestic products by using the semantic differential method. The purpose of the study was to measure the cross-cultural image of “made in” products as produced by US and Japanese businesses. The study consisted of a random sample of 230 Minnesota businesses chosen from the Minnesota Directory of Manufacturers and 100 Tokyo businesses chosen from the Tokyo Directory of Companies.
Countries used were USA, Japan, Germany, UK, France, Italy, Switzerland, and Canada.
The questions were carefully translated into Japanese making sure that the associative value of the language was not lost in the translation.
In 1984, Erickson, et al. (1984) analysed the country of origin effects on the evaluation of automobile brands. Data were collected from 96 MBA students at the University of Washington. Subjects were asked about their beliefs and attitudes towards ten automobile models (e.g. four US, two German and four Japanese models). Semantic differential scales were used for all rating questions used in the questionnaire. Respondents were also asked to rate their familiarity with each auto, after which they provided an overall rating on a five-point semantic scale.
The empirical results indicated that country of origin affects beliefs but not attitudes. The authors argued that the study demonstrated that image variables also affect beliefs through inferences made by consumers: “It also indicated that the effect of image variables on attitude was not direct; any influence they have appeared to be a secondary one acting through beliefs” (Erickson, et al., 1984).
Morello (1984) did a comparative research on the image of domestic and foreign products. The purpose of his study was to determine what the relationship is between the image of a country and the image of the products “made in” that country. Seven countries were used in the study, namely:
1 Belgium.
2 France.
3 Holland.
4 Italy.
5 Spain.
6 USA.
7 USSR.
8 West Germany.
Morello (1984) asked a Dutch group of 29 students and an Italian group of 37 students to rate the products from the eight selected countries using 12 sets of bipolar adjectives. The results indicated a significant relationship between these two images and the research concluded that a country of origin effect does exist and may affect consumer
buying behaviour.
Effect of crisis in country of origin
The research that has provided information about tourism crises has concentrated on providing typologies of crises, examining popular perceptions of major events and studying the effects on particular sectors and destinations. The effects of terrorist incidents and political instability have been a particular focus of attention
A study on the effect of foot and mouth disease and September 11, on the tourism industry in Scotland revels that country of origin certainly have an effect on the behavior of consumers.
The first case of foot and mouth disease (FMD) occurred in the north of England in February 2001 and tourism demand in Scotland was mainly affected from the spring onwards. Recovery was subsequently forestalled by the events of September 11
At first sight, it might appear that FMD and the September 11 events resulted in considerable downturns in US, French and German tourism demand in Scotland. FMD occurred in the first quarter of 2001, followed by the US events in the third quarter. As the main effects of FMD were felt in the second and third quarters of the year, it is useful to compare tourist demand in the second and third quarters of 2001 with demand in the same quarters of preceding years.
A forecasting model was used to estimate the responsiveness of tourism demand to changes in economic variables that occurred prior to the crises of FMD and September 11. It was then used to predict the levels of tourism demand in Scotland that would have occurred in the presence of changes in prices, exchange rates and income but in the absence of the two crises.
The difference between the numbers of actual arrivals and predicted arrivals of tourists provided an estimate of the effects of the crisis. In the US case, arrivals decreased by 20.6% in the third quarter of 2001 relative to the number predicted to arrive if the crisis had not taken place but given the changes in the other economic variables that occurred in the crisis period.
In the case of tourism from the USA, arrivals in the third quarter decreased by 5.3% compared with the previous summer and by 10.3% compared with the average of the five previous quarters. (L. Eugenio-Martina, 2004)
Comparison of the US results with those for French tourists shows a very different picture. In this case, both arrivals and receipts decreased dramatically. The number of arrivals fell by over 50% because of FMD. Receipts decreased by 39.3% with respect to the five previous years and by 31.6% (the FMD effect) with respect to the predicted value. Arrivals from Germany were also affected considerably. The number of visitors fell by 25% relative to the average of the previous five summers and by 22% relative to the predicted number.
The effects of the September 11 crisis were estimated.
In the case of US tourist arrivals in Scotland, there were immediate negative effects during the fourth quarter, with decreases of 16.3% relative to the average of the five previous years and 26.3% relative to the predicted numbers. In contrast, the numbers of arrivals during the first quarter of 2002 were virtually unaltered. A particularly severe effect occurred in the third quarter of 2002 with decreases of 14.5% relative to the five previous years and 27.3% relative to the predicted number.
Tourists from different countries respond differently to tourism crises and the messages that should be communicated to them should differ accordingly.
This paper considered the responses of tourists to Scotland from the USA, France and Germany to two different types of crisis - foot and mouth disease and September 11. The results from the model showed that tourists from different countries do; indeed, respond differently to different types of events.
How does COO Effects Medical tourism?
When a person decides to get medical treatment he assures that he gets the best treatment that is available within the limit of his resources. Medical tourism involves the patient from one country to travel to some other country where he can get his treatment at a lower cost but not necessarily under poor quality standards.
When it comes to health, sometimes the price factor can be ignored. The person will look for the best possible alternative where he gets high quality standards and hygienic and technologically sound facilities.
When selecting a medical tourist destination he will look at all the factors that will be discussed below and make sure that he is not exposed to any kind of threat while visiting the country, that risk can be of poor hygiene standards, unskilled manpower, political and legal interferences and instabilities in the country, fear of terrorist attack, pollution, infrastructure etc.
When the medical tourist destination is a developing country like India, people have their perceptions about it being a not so developed country and can question its ability to provide top-notch facilities and treatment and may not want to visit India for a medical treatment. However the fact is that India can provide medical services equivalent to the most developed nations in the world. It has state of the art facilities and infrastructure, highly skilled doctors and nurses, which not only serve in India but also in many of the heading hospitals across the world. The government of India also supports and provides all kinds of comforts and benefits to patients who would like to visit India for medical treatment.
The Factors that affect the Country of Origin can be classified as follows:
Poilitcal and Legal
Economic
Social and cultural
Demographic
Technological
Demographic environment
Factors that have to be considered under demographic environment are, population, size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns; and regional characteristics and movements.
Economic environment
Nations vary greatly in level and distribution of income and industrial structure. There are four types of industrial structures: subsistence economies, which have few opportunities for marketers; raw material exporting economies like Zaire ( copper) and Saudi Arabia (oil) with good markets for equipment, tools, supplies, and luxury goods for the rich; industrializing economies, like India, Egypt and the Philippines where a new rich class and a growing middle class demand new types of goods.
People often distinguish countries with five different income-distribution patterns: (1) mostly low incomes; (2) very low incomes; (3) very low, very high incomes; (4) low, medium, high incomes and (5) mostly medium incomes.
Natural environment
The deterioration of the natural environment is a major global concern. In many world cities, air and water pollution have reached dangerous levels. There is a great concern about “ greenhouse gases” in the atmosphere due to burning if fossil fuels, about the depletion of the ozone layer due to certain chemical, and about growing shortages of water.
Technological environment
One of the most dramatic forces shaping people’s lives is technology. Technology has releases such wonders as penicillin, open-heart surgery, and the birth control pill. It has released such horrors like the hydrogen bomb, nerve gas, and the submachine gun.
Every new technology is a force for “creative destruction”. Transistors hurt the vacuum-tube industry, xerography hurt the carbon paper business, and autos hurt the railroads and televisions hurt the newspapers. Instead of moving into the new technologies many old industries fought or ignored them, and their businesses declined.
Unlimited opportunities for innovation
Scientists today are working on a startling range of new technologies that will revolutionize products and production processes. Some of the most exciting work is being done in biotechnology, computers, microelectronics, telecommunications, robotics and designer materials. Researchers are working on AIDS cures, happiness pills, painkillers, totally safe contraceptives, and nonfattening foods.
Increased regulation of technological change
As products become more complex, the public needs to be assured of their safety. Consequently, government agencies’ powers to investigate and ban potentially unsafe products have been expanded.
Political legal environment
Decisions are strongly affected by the developments in the political and legal scenario.
This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals, sometimes these laws also create new opportunities for business.
Socio-cultural environment
Society shapes our beliefs, values and norms. People absorb, almost unconsciously a worldview that defines their relationships to themselves, to others, to organizations, to society, to nature, and to the universe.
1. Views of themselves: people vary in the relative emphasis they place on self-gratification. Today some people are adopting more conservative behaviors and ambitions.
2. Views of others: people are concerned about the homeless, crime, and victims, and other social problems. They would like to live in a more humane society. At the same time people are seeking out there “own kind” and avoiding strangers. they hunger for serious and long-lasting relationships with few others. These trends portend a growing market for social-support products and services that promote direct relations between human beings, such as health clubs, cruises, and religious activity.
3. views of organizations: people vary in their attitudes toward corporations, government agencies, trade unions, and other organizations. Most people are willing to work for these organizations, but there has been an overall decline in organizational loyalty. The massive wave of company downsizings had bred cynicism and distrust. Many people today see work not as source of satisfaction, but as a required chore to earn money to enjoy their nonwork hours.