LESSON 3 : Explaining the Effects of the Various Socio-Economic Factors affecting Business

and Industry
The first step to understanding what socioeconomic factors are is to understand social
economics. This is a specialized branch of economics that concerns itself with studying the
intimate relationship between economics and social behavior. Such things as ethics, social norms
and different social philosophies have an impact on how consumers behave in an economy and
the eventual shape that economy will take. The study of social economics seeks to predict what
kind of results to expect when the society has been changed. It does this by studying politics,
history and other social sciences.
Socio-economic factors are primarily the PEST – POLITICAL, ECONOMIC, SOCIAL, and
TECHNOLOGICAL FACTORS, these are the main factors that affects businesses an industry
for the next lessons. Mostly used business tool by organization is the PEST Analysis. It is to
discover, evaluate, organize, and track macro-economic factors which can impact on their
business now and in the future. The framework examines opportunities and threats due to
Political, Economic, Social and Technological forces. Political. Political or politically motivated
factors that could impact the organization. It includes government policy, political stability or
instability, corruption, foreign trade policy, tax policy, funding grants and initiatives, etc.
Economic. Economic trends, growth rates, industry growth, seasonal factors, international
exchange rates, international trade, labor costs, unemployment rates, taxation, inflation, interest
rates, monetary policies, raw material cost, etc. Social. Attitudes and beliefs about a range of
factors including money, customer service, imports, religion, cultural taboos, health, work,
leisure, the environment; population growth and demographics, immigration/emigration, life
style trends, etc. Technological. Technology and communications infrastructure, legislation
around technology, consumer access to technology, emerging technologies, automation, research
and innovation, technology incentives, etc. These are the PEST analysis that provides an
overview of all the crucial external influences on the organization, supports more decisive and
knowledgeable decision making, helps evaluate how your strategy fits into the broader
environment and encourages strategic thinking, assists planning, marketing, organizational
change initiatives, business and project development, project management and research papers.
As we are now in the “new normal” norm some of our goods and services can be buy and sell
through online platforms such as face book, Instagram, Twitter and etc. Technology is major
factor that affects our behavior as consumer. Some are now having groups like Barter
Community or online selling stuffs thru this money are easily earned because of the numbers of
prospect consumers online. Most demanded services and/or products through online is selling of
homecooked foods like “Kimchi” or “Kimbop” (Korean foods) because Filipinos now a days are
mostly a fan of Korean dramas thus this new product were in demand and also with Korean
fashions and beauty essentials. Online sellers now are rapidly growing because consumers find it
easy to buy stuffs because of the free deliveries, free shipping fees or even decided to meet up on
agreed places. It is the most convenient way in exchanging services and goods.
In understanding social – economic and socio-economic factors, I must:
 Define social - economic;
 Determine various socio-economic factors; and
 Define the different socio-economic factors.
1. Social Economic - a specialized branch of economics that concerns itself with studying the
intimate relationship between economics and social behavior.
2. Various socio-economic factors are: Political, Economic, Social and Technological factors,
etc.
3. Different socio-economic factors:
Political Factor – includes government policy, political stability or instability, corruption, foreign
trade policy, tax policy, funding grants and initiatives, etc.
Economic Factors – economic trends, growth rates, industry growth, seasonal factors,
international exchange rates, international trade, labor costs, un-employment rates, inflation, etc.
Social factors – attitudes and beliefs about a range of factors including money, costumer,
services, religion, cultural taboos, health, work, leisure, environment, population growth,
lifestyle trends and etc.
Technological Factors – technology and communication infrastructure, legislation around
technology, consumer access to technology, emerging technologies, automation, research and
innovation, technology incentives, etc.
Socioeconomic factors are, therefore, the social and economic factors that shape and determine
the dynamics a society will experience. These are factors that affect the behavior of a particular
group, also known as a socioeconomic class. Perhaps the most interesting behavior of members
of a socioeconomic class is their behavior as consumers. Different socioeconomic classes will
generally have different priorities, and this will affect how they spend their money. Various
socioeconomic factors that impacted business and industry are primarily the PEST –
POLITICAL, ECONOMY, SOCIAL, TECHNOLOGICAL FACTOR, these are the main
economic factors that affect a business.
Environmental Analysis
This is a special term that refers to the process of looking at the external socioeconomic issues in
a business. It is considered a part of general business analysis, so it is useful to the executives of
a company. It can help them grow the organization, increase the streams of revenue the company
receives and also get ahead of competitors.
Socioeconomic Factors that may affect Businesses and Industry
Economic factors are an essential part of all business analysis, no matter whether it is PEST
analysis, PESTLE analysis, or any other kind of business analysis. These are the main factors
considered when a company makes financial decisions. These factors are connected to money,
goods and services. They affect businesses on a micro-level, but they are a lot more powerful
than that – they also affect the entire economy on a macro-level. The economy, whether a local
economy or a global one, will pretty much be the determining factor in the details associated
with the operation of a company, such as the value of its assets, consumer demand and even
taxes. Some economic factors you must think about in your business include exchange rates,
interest rates, recession, inflation, taxes, and demand and supply. Here is a closer look into three
of these factors and their connection to businesses.
Interest Rates
Interest rates are everywhere, and are imposed by many different people. In fact, banking
institutions are obsessed with knowing what the status for interest rates in the economy is for a
good reason. It is how they determine their lending practices. It is also good information for a
company that relies on debt capital to finance ambitious projects.
Exchange Rates
This is a slightly more nuanced topic than that of interest rates. At the heart of it, exchange rates
are an important factor to consider for any business involved in importation and exportation of
various goods and services. When exchange rates fluctuate, they affect the ability of a company
to pay its international suppliers in a satisfactory manner. This can also affect the profit margin
of the company, as well as the amount of resources it needs to stay afloat.
Recession
Whenever an economy faces a recession, it has the potential to change the attitude taken by
consumers toward their purchasing decisions. This may force companies to drop prices to stay
afloat. In addition, Socioeconomic factors not only affects business and industry but of Health
and Education. The health of a person or people, in general, is to a great extent determined by the
environment as well as their circumstances. It affects the social status and income of the
household or the person, educational level, physical environment and etc. Socioeconomic status
is not based solely on income. There are a slew of other things, such as education level, financial
security, and the perceived social class and status of the individual. Along with the quality of life
enjoyed by the individual, consider the privileges and opportunities gained as a result of this
socioeconomic status. Furthermore, these examples of socioeconomic factors not just affect
small business but also affects our industry as a whole: capital, income, tax and revenues,
investors and suppliers, households, and even international trade are subject to fluctuate or to
increased.