Last weeks content
Types of government: Federal and Unitry |
Federal and Unitary |
Four types of risk: Affects how a business operates |
Policies, Procedural (tax), Distributive, Catastrophic (disasters) |
Case example -Iphone
iPhone generations changing in colour from black to colourful |
Who are the markets and who do they appeal to. The use of colours is important for specific countries, age and gender e.g. Asia likes bright phones (There biggest market is Asia so they use demographics to figure out what colours they like)
Lesson so far
Markets are not the same between countries |
Markets are not the same within countries |
It’s important to use properly sampled data |
Variation between and within countries can include income, age, sex, ethnicity, culture and preferences |
How does this affect businesses?
We need to think about what sort of product to offer, and how the nature of and change in conditions in our
target market may affect our ability to profitably produce (supply) and sell it (demand)
What is an Institution?
Formal and informal rules governing the way society works, thus affecting the business environment |
“Systems of established and prevalent social rules that structure social interactions |
A complex of positions, roles, norms and values lodged in particular types of social
structures and organising relatively stable patterns of human resources with respect
to fundamental problems in….sustaining viable societal structures within a given
environment
Summary of Lecture
Demographics and demographic trends have a direct influence on business’ future |
Demographic analysis can help businesses look into the future: consumers & labour force |
Ageing as a major challenge |
The role of immigration |
Demographic data are easily accessible and the dynamics behind it are not overly complex |
The role of institutions in doing business, particularly when going abroad |
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Breaking down Demographics
Regions, provinces, states, cities |
Broad segmentation |
County, prefecture |
More specific |
Post code |
Very specific |
This is good for looking at median income to find where the people are. If you know how much someone is earning it is quite easy to target you product to that area or post code.
Class activity - BMW
Gender |
Males |
Income |
High |
Age |
40 |
Married |
Growing children |
Active or family centric lifestyle |
Trying to sell a BMW 5 series, who should we target
Urbanisation
The increase in the proportion of people living in towns and cities compared to rural areas. |
In what way could levels of urbanisation matter for businesses?
Where does my target group live?
Where can I find employees?
Basic demographic measures
Working age population: number of people aged 15-64 |
Dependent population: (number of people 0-14) + (number of people aged 65+) |
Total dependency ratio*: (dependent population) / (working age population) |
Businesses and demographic changes
A changing demography can lead to potential opportunities or a need to change business strategy |
A country may have an ageing population, but there may be relatively youthful areas where demand for aged-care services is low |
A country may have a rapidly growing economy, but there may be poorer areas where demand for luxury goods is low |
Alternatively, a country may have a relatively low per-capita income, but there may still be a section of the population wealthy enough to afford luxury goods. |
There are many more demographic related factors, but you need to work out which demographic changes are most relevant for your business
Do institutions matter to business?
Institutions shape the society in which businesses operate, as well as the culture of the people the business works with or sells to. |
Institutions as agents of socialisation shape consumer preferences |
Institutions have strong influence over the size, quality and composition of the workforce (e.g. education levels, labour laws, legal retirement age, anti- discrimination laws, cultural preferences, &c.) |
Institutions enable or constrain business activities |
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Why businesses study demographics?
Product Segmentation |
Decide where and when to locate products and services. |
Explain what is driving changes in demand |
Identify patterns to understand where demand will be greatest |
Quantify demand for products and services, now and in the future |
Class exercise: Average Demographics
Australia Average person: Female, 38, Anglo-Celtic, Married with 2 children, Roman Catholic, Finished high school, $1700 income pw, 40 hrs per week, net worth $740,000, holiday location New Zealand, Toyota |
America Average person: Female, 38, Went to college, no degree, White, Single with 2 children, protestant Christian, English tongue, 35 hours per week, $1000usd per week in income, net worth $300,000, holiday location Florida, Toyota |
China Average Person: Male, 35, Married with one child, no religion, finished middle school, 40hr per week, 60,000 RMB per year, Net worth $25,000, holiday Beijing or Shanghai |
How age dependency affects businesses?
Labour force |
Taxation rates |
Aged-care market |
Massive industry |
Other products? |
Ageing/shrinking societies
Rapid Growth |
Nigeria, Saudi Arabia, Guatamala |
Slow growth |
U.S, AUS, CAN |
Zero Growth |
Spain, Austria, Italy |
Negative Growth |
Germany, Bulgaria, Sweden |
The State
A product of national history, culture, as well as other institutions |
Directly responsible for shaping political structures, economic policies, social policies, infrastructure, &c. and one of the few institutions that can mandate change |
Legal and administrative institutions ideally create an enabling environment for business but can also restrain business |
Indirect influence over legal structures, capital and labour markets, industrial relations and unions |
Events that can shape institutions and values
War |
Immigration policies that import other cultural values |
State ideology and policies |
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