ACCA Applied Knowledge · Business and Technology · Social and demographic factors
A country's government reports that its birth rate has fallen steadily for two decades while life expectancy has risen. A manufacturer of children's clothing in that country is carrying out a PESTEL analysis. Which of the following is the most likely implication of this social and demographic trend for the manufacturer?
The manufacturer should expect long-term home demand to shrink, because a falling birth rate means fewer children. It may need to find export markets or diversify its range. Longer life expectancy raises the number of older people rather than children, and population structure is a social factor.
- ALong-term demand in its home market is likely to shrink, so it may need to seek export markets or diversify its product rangeCorrect
- BDemand for its products is likely to rise because a longer life expectancy increases the number of children
- CThe trend is a political factor rather than a social one, so it can be ignored in the social analysis
Explanation
A falling birth rate reduces the number of children in the population over time, so the home market for children's clothing will tend to shrink. The firm should consider exporting or diversifying. Rising life expectancy increases the number of older people, not children, so the second option is wrong. Population structure is a social and demographic factor, not a political one.
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