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

Zentra Ltd, a manufacturer of baby products, operates in a country where net immigration of young families has increased sharply. Which statement best describes the effect on Zentra's external environment?

The inflow of young families is a demographic opportunity for Zentra. Migration enlarges the population and increases the number of households likely to buy baby products, so demand for its products should rise, whereas the other options misclassify the factor or claim an unsupported fall in demand.

  1. AIt is a demographic opportunity, as the rising number of young families should increase demand for its productsCorrect
  2. BIt is a technological threat, as new entrants will bring improved production methods
  3. CIt is a political risk, as immigration always causes consumer demand to fall

Explanation

Migration of young families changes the size and age structure of the population, a demographic factor. For a baby-products maker this increases the target market, so it is an opportunity. The other options misclassify the factor or assert an unsupported effect.

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