© Luis Pachón

DEMOGRAPHIC, TECHNOLOGICAL AND NATURAL ENVIRONMENT.

International Business II

© Luis Pachón

DEMOGRAPHIC ENVIRONMENT

Demography: Is the study of human populations in terms of size, density, location, age, gender, race occupation, and other statistics.

• Demography is very important because it involves people, and people make up markets.

• The world population is growing at an explosive rate. This population explosion has been of major concern to governments and various groups.

• The less-developed regions of the world currently account for 76% of the world population.

• The explosive world population growth has major implications for business due to:– Growing human needs to satisfy.– Growing market opportunities.

• It is good to keep close track of demographic trends and developments in their markets, both at home and abroad.

DEMOGRAPHIC ENVIRONMENT

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• Relevant variables:– Changes in age structure.– Changes in family structure.– Geographic population shifts Migration.– Educational characteristics.– Population diversity.

• Baby Boom: A major increase in the annual birth rates. It started after world war II and lasted until 1960’s. This segment of the market represents an opportunity.

DEMOGRAPHIC ENVIRONMENT

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• By the mid-1970’s the birth-rate had fallen sharply due to the smaller family sizes resulting from the desire to improve the personal living standards, from the increasing desire of women to work outside home and from improved birth control.

• The already mentioned facts had generated changes in the family structure and the market.

• For the twenty-first century a decline of the birth-rates is expected.

DEMOGRAPHIC ENVIRONMENT

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• Nowadays people tend to marry less and have less children.

• Changes in the value system and roles assumed by the members of the family have great impact.

• The percentage of people living alone has increased considerably in the past years.

• The population shifts have been from rural to urban areas.

DEMOGRAPHIC ENVIRONMENT

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• Another population shift has occurred from less developed countries to industrialized countries.

• Movements from the cities to the suburbs.

• In general terms the concern for education has increased so the education itself has improved.

• Racial and ethnic diversity play a really important role.

DEMOGRAPHIC ENVIRONMENT

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• Forces that create new technologies, creating new product and market opportunities.

• Technology has released wonders and horrors.

• The following technological trends must be taken into consideration: – Fast pace of technological change.– Research & Development.– Concentration on minor improvements.– Increased regulation.

TECHNOLOGICAL ENVIRONMENT

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• Scientist today are working on a wide range of new technologies that will revolutionize products and their manufacturing processes.

• Biotechnology, miniature electronics, robotics, and materials science.

• Investment on Research & Development is higher every time governments and private companies.

• Many companies are making minor product improvements instead of gambling on major innovations.

TECHNOLOGICAL ENVIRONMENT

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• Involves natural resources that are needed as inputs or that are affected by production activities.

• Environmental concerns have grown steadily during the past two decades.

• Many companies have assumed a responsible behaviour towards the natural environment because consumers are demanding it.

• 90’s “Earth Decade”.

NATURAL ENVIRONMENT

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• The pollution levels are a major concern as well as the damage caused to the ozone layer, the extinction of the species and the renewal of resources.

• Aspects take into account:– Shortages of raw materials.– Increased cost of energy.– Increased pollution.– Government intervention in natural resource

management.

NATURAL ENVIRONMENT

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• Water scarcity is a problem for many countries.

• Renewable resources, such as forests and food, have to be used wisely Reforestation.

• More of the world’s limited farmable land is being developed for urban areas.

• Non-renewable resources, such as oil, coal and various minerals, pose a serious problem.

NATURAL ENVIRONMENT

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• The price of the renewable resources is higher every day.

• The search for other sources of energy is a priority nowadays.

• Contamination is being battled.

• Recycling, the adequate disposal of waste, among others is not only a responsibility of companies but it represents an opportunity.

NATURAL ENVIRONMENT