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

In a PESTEL analysis of the external environment, which of the following is most clearly a social factor affecting a clothing retailer?

A growing consumer preference for ethically sourced, sustainably produced clothing is the social factor, because social factors concern changing attitudes, values and lifestyles. Tax rates are political, exchange rates are economic, and an inventory system is a technological or internal matter.

  1. AA growing consumer preference for ethically sourced, sustainably produced clothingCorrect
  2. BA rise in the corporate income tax rate
  3. CThe introduction of a new inventory management system
  4. DA fall in the exchange rate of the local currency

Explanation

Social factors cover changes in attitudes, values, lifestyles and demographics. A shift in consumer preference towards ethical sourcing is a change in social attitudes. The tax rate is political, the inventory system is technological or internal, and the exchange rate is economic.

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