Player's Faction System in Relation to Entity Groups

Is it possible to create something like this using variables? I'm talking about factions, like in "World of Warcraft," where a player who chooses the Orcs interacts with them in a friendly manner, while the Human race becomes hostile to the player. A year ago, I saw proposed solutions using specific items or simple AI settings, but none of the methods worked. Has anything changed? Has anyone else tried to do this?