Analysis of the External Environment of Business
...n business, changing the way that a business is perceived depending on where in the world it is or how in touch it is with what itˇ¦s customers want. Because of the scope of the Social dimension it is impossible to cover all aspects of it in this paper, we will therefore concentrate on population change and the ways in which it affects business. Population change is by definition dynamic, meaning that it is a constantly changing factor. Over time we see that not only do population levels change, but the distribution across ages, social and ethnic groups also changes. These changes directly impact business by, for example: „X Changing the size of the workforce (e.g. in the case of increasing/decreasing overall population size) „X Increasing the number of available customers (e.g. an ageing population and lower mortality means that more people will require a care home place) „X Increasing or decreasing the skill level of the workforce (immigration and emigration can cause this) Table 1 and figures 1 and 2 show examples of aspects of the changing population in the United Kingdom in the 20th Century, as used in examples in the preceding three points. Table 1, UK Population 1901 to 2001. (Hicks, 1999) Fig 1, UK Life Expectancy at Birth 1901 to 2021. (Hicks, 1999) Fig 2, UK Annual Net Migration 1901 to 1997. (Hicks, 1999) Such changes are on a national ˇ§spatial scaleˇ¨, however population change can take place at several such scales, which are local, national, supranational and international. The spatial level at which population change takes place can have a differing impact on any business. To look at this we will use as an example the UK soft drinks company AG Barr, and their primary brand ˇ§Irn-Bruˇ¨. The local spatial scale could be applied to just the country Scotland. Population change at this level would impact the workforce of the company as well as the number of customers in their primary market, where ˇ§Irn-Bruˇ¨ is also the market leader (AG Barr, 2006). Population change at a national level (i.e. the whole of the UK) would also affect the available market for the product. An example of how the market might decline is that in an ageing population, or a population that does not have a cultural connection with the product, there would be less awareness of, and/or requirement to purchase, a sweet, fizzy soft drink, therefore affecting the amount of available customers. However supranational (Europe-wide) and international (worldwide) population change will have little affect on ˇ§Irn-Bruˇ¨ sales, as the brand is almost exclusive to the UK. If we now look at a much larger international corporation such as Shell, changes on the local scale have little overall affect on the business. Changes on a national scale affect the business in normal ways, however as a group Shell works in over 70 countries, and therefore has to deal with national population change in each individual country. The changes to population that affect Shell in the greatest manner happen on the international scale. Changes at this level affect primarily the number of people who are possible customers for their products, with knock-on affects to product price, availability, etc. Also it is important to understand that population change on different scales directly affects, and is affected by, the Economic and Political dimensions of the External Environment. Looking at the national scale, as population changes in a country the needs of that country change and therefore the available markets and the choices of the political leadership will change with the population. However if population change happens at a rate which is unsustainable then it can adversely affect the economy of that country, or political choices may have to be ma...