Several aspects in the business environment can influence an organization’s performance and decisions.
Social and demographic factors in business environment
Organizations must be aware of social and demographic trends since they have an impact on:
- The organization’s ability to recruit and the recruitment process.
- They have an impact on the demand for the company’s products and services.
- They may have an impact on the organization’s supply of materials utilized to provide goods and services.
demographic the studying of population in relation to the size and characteristics is known as demography. Demographers are interested in the following topics:
- A country’s age structure will shape the sort of items & services demanded.
- Household patterns, such as traditional patterns.
- The male-female ratio, as this can influence an organization’s ways to hire from a specific area.
- The population’s expected future size and features in order to forecast a rising market for products.
Social Developments Organizations must examine the following societal developments and try to predict how they will impact their operations: social structure, values, attitudes, and tastes.
Impact of social changes in an organization
- It separates societies into groups (socio-economic groups)
- People from the same social class have similar likes and purchasing habits.
- As the societal structure changes, so it will increase the degree of consumer spending on good or services provided by organizations.
- A society’s collective values also impact the type of goods requested and the level of demand.
- Changes in communal values will also affect demand for goods and services.
- To respond to changing values, businesses will have to make inventive product improvements. For example, in a society concerned about negative environmental impact, a corporation may be required to change its ingredients to ensure that they do not hurt the environment and that the packaging is reusable.
Customers nowadays are “value maximizers” who seek high-quality goods and services. Organizations must increase the quality of their goods and services, as well as the content of their advertising, in order to continue selling to changing customer attitudes and purchasing patterns.
- When the aggregate tastes of a company’s consumer base shifts, the company’s product mix must shift as well.
- According to the preferences of their clients, a mobile phone maker develop phones that are simpler, medium or more complicated.
- Governments in overpopulated countries may strive to lower population size and growth rates by limiting the number of births, similar to China’s ‘One Child Policy.
- Governments in less-populated areas might encourage immigration by loosening immigration regulations and providing tax credits to families with two or more children in order to attract a larger workforce.
- The government may raise the retirement age in areas where the workforce is ageing.
- •The government could decrease the income gap in households by enacting a tax system that assures a more equitable distribution of income.
- High-income households may face higher taxes because of their income and and consumption of goods and services, while low-income households may receive subsidies.
Government might try to raise education levels in society and make primary and secondary school compulsory, as well as subsidizing educational fees to encourage workers to learn skills that will help them get jobs.
- •Government could pass laws prohibiting the sale and advertisement of foods or other products that are harmful to one’s health, such as stricter laws banning the sale and promotion of cigarettes.
- Government could also finance medical and health services in order to minimize mortality risk and improve the services provided to the general public.
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Must read other FBT notes
Chapter 1: Business Organization| F1/FBT ACCA notes