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ACCA Applied Knowledge · Business and Technology · Social and demographic factors

A manufacturer of mobility aids is analysing its external environment. Which of the following statements about the use of demographic data in its PESTEL analysis is most accurate?

Demographic data like age structure and life expectancy can support fairly reliable long-term demand forecasts, but should be combined with attitudes and income levels. These trends change slowly and predictably, affect demand as well as labour supply, and are normally analysed under the social factor of PESTEL.

  1. ADemographic data such as age structure is useful only for forecasting labour costs, not for demand
  2. BDemographic trends are largely short-term and should be disregarded in long-term planning
  3. CDemographic data such as age structure and life expectancy can support relatively reliable long-term demand forecasts, but must be combined with attitudes and income levelsCorrect
  4. DDemographic data is classified under the economic factor and not the social factor

Explanation

Demographic variables such as age distribution change slowly and are predictable, so they support long-term forecasting of demand for products like mobility aids. However, demand also depends on income and attitudes, so they should be combined. Demographics are normally treated within the social factor and affect demand as well as labour supply.

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