Chapter 15 Unlocking the Business Environment Chapter 15 The Macro Environment – Demographic Influences By the end of this chapter you should have a better understanding of: what is meant by demographic influences; key demographic influences; current and emerging ethical and international issues in demographics.

Chapter 15 Unlocking the Business Environment What is meant by demographic influences? Demographics refers to the characteristics of a given population. When we refer to demographic influences we mean the way in which the size and structure of populations impact on organisations.

Chapter 15 Unlocking the Business Environment Key demographic influences The key demographic influences considered in this chapter are: size of the population; age of the population; geographic distribution of the population; income; employment (see chapter 10).

Chapter 15 Unlocking the Business Environment Key demographic influences – size of the population The UK’s population has experienced continuous growth since the 1970s. In the new millennium natural change is only responsible for about one-third of population growth, with migration accounting for almost two-thirds of growth. The rise in migration to the UK since 2004 reflects the enlargement of the EU in May 2004 and the removal of barriers to the people of the ten new member countries.

Chapter 15 Unlocking the Business Environment Key demographic influences – age of the population Population growth has not occurred evenly across all age groups. As a result of the decline in fertility and mortality rates, the UK has an ageing population.

Chapter 15 Unlocking the Business Environment Key demographic influences – geographic distribution of the population The UK’s population density is one of the highest in the world; however, the population is distributed unevenly between the countries and regions, and between urban and rural areas. The UK has pockets were the population is concentrated. The highest population densities are found in London and the North West.

Chapter 15 Unlocking the Business Environment Key demographic influences – income Income distribution patterns in the UK have changed dramatically since the 1970s. Income inequality in Britain remains high. The persistent high levels of income inequality could be explained by: a fall in male labour-market participation in households where there is only one wage earner; the increase in the gap between the wages for skilled and unskilled labour.

Chapter 15 Unlocking the Business Environment Key demographic influences – external factors There are many factors that impact on a business over which the organisation has no control. Recent increases in fuel charges are a good example; another could be a shortage of a vital component that is no longer available. We classify external factors that impact on organisations using PESTLED, that is, political, economic, social, technological, legal, environmental and demographic factors. PESTLED is useful when considering the external macro environment of an organisation.

Chapter 15 Unlocking the Business Environment Current and emerging ethical and international issues As people become more aware and concerned about the urgent challenge of climate change and other environmental issues, entrepreneurs have taken advantage of this by offering new products and services. The migratory movement is changing the composition of the UK’s population. There is still hostility towards migration and some consider that although migration has made the UK richer, it puts too much pressure on the nation’s resources, especially in the poorest communities.

Chapter 15 Unlocking the Business Environment Summary Demographics refers to the characteristics of a given population. Demographic trends impact on organisations in a number of different ways. The key demographic trends studied in this chapter are: the size and age of the population, geographic distribution of the population, income and employment. Demographic trends also raise some ethical and international issues.