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SHRM COLLEGEDiploma in International Business Management

IBM10800 GLOBAL BUSINESS ENVIRONMENT

Assignment - Question 1

Module Name: Global Business Environment

Class Code:

Students Name:

IC Number:

Lecturers Name:

Submission Date: 9th May 2014

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1 What challenges do graying populations create for companies?

The worlds population is growing older, leading to higher absolute numbers of elderly people, a

larger share of elderly, longer healthy life expectancies, and relatively fewer numbers of

working-age people. The challenges are primarily in maintaining their workforce and forecasting

changes in consumption patterns. Companies need to tailor and effectively market products to

aging consumers.

Firstly, people will have to work because they get older; there are also fewer young people to

replace the old generation. Also, the elderly is very experienced in the work, a knowledge that is

not a younger replacement yet will possess. The taxes have to go up because there are older

people who receive benefits.

Secondly, since there are more people retiring, there will be fewer working people in the labor

market. Companies will find it hard to source for workers in a labor market that comprises of the

elderly.

Thirdly, since elderly people are regarded as less productive, the quality of the work force will be

reduced. Companies that hire a graying population will have its production output slowed down

by this demography thus making the company less competitive.Pension companies will be

burdened while trying to pay for pension funds for this huge demography.

Lastly, since there will be a change in taste and preference, spending habits as well as lifestyle,

spending on some products will decrease as more people enter this age bracket.

2 What opportunities do graying populations create for firms?

Older people also bring with them opportunities such as plastic surgery and drug sales. In Japan

they are already working on major technological changes such as devices used once by an

elderly signal transmission to the family so that they know that their grandparents alive be.

Robots are being developed to assist elderly.

There will be increasing demand for host of new products. The case illustrates this in terms of

medicine, eye care, cookware, financial services, and so on. There will be a demand for private

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nursing homes and hospitals, cancer treating drugs as well as life prolonging drugs for

pharmaceutical companies. Also, there will be a higher demand for products such as healthier

foods as well as high demand for products offered by recreational facilities.

Another example of business opportunities spurred by aging, media companies are hoping to

profit from aging viewers and readers by shifting their target away from the traditional range of

18-49 year olds. Although some adaptations lie on the more distant horizon, others can be

undertaken right now, to the benefit of both younger and older employees, firms, and society

both now and in future.

3 How will demographic changes affect the competitiveness of countries in the

international marketplace?

In countries where there are more young people, it is difficult for all young people to find

suitable jobs and training. In countries where there are more elderly people is it is more difficult

to find a younger person is suitable for the function. Anyhow youngsters will miss a wealth of

experience in these countries.

The burden of caring for the elderly will be borne disproportionately by countries with low or

negative population growth rates. These countries will have a smaller labor pool and higher age-

dependency ratios. Because of an abundance of labor, countries with higher population growth

rates such as India will have lower wage rates and the expense of caring for the elderly will be

spread across a larger group of young workers.

Since elderly people are regarded as less productive, the quality of the Chinese work force will

be reduced. Since the economy will have more aging people, the countrys output as well as

competitiveness will be reduced as compared to economies with a much younger population.

The increasing aging population might cause investment capital to flow from a country whose

population in comparatively older to the one whose population is comparatively younger and

consequently whose rewarding rate of the capital will be high.

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4 What has been the impact of the one-child policy on Chinas economic fortunes?

Demographic changes in China are redrawing the parameters of the countrys future. These

changes include a substantial decline in the supply of young labor, the escalating financial

burden of caring for the elderly, and an aging society with Chinese characteristics, caused in

large part by Chinas three-decade one-child policy. These changes have already begun to exert a

powerful impact on the Chinese economy, and pose a serious risk to future economic growth,

internal migration and immigration, social harmony and political stability.

As society ages faster than expected, Chinas future demographics need to be reassessed.

Sustained low fertility means that the number of young workers will decline more sharply than

projected. Declining fertility levels reduced the availability of young workers, but this was

exacerbated by the expansion of higher education. Sustained low fertility and rising college

enrollments mean that the supply of young workers will continue to decline.

As Chinas demographic fortunes reverse, the economy will slow down regardless of other

factors driving growth. The shrinking labor force will also require education reforms to boost

productivity. Chinas labor force must become better educated, more skilled, and produce

graduates with a greater ability to innovate. The current higher education system, which focuses

on training technicians rather than nurturing individual thinkers, suffocates creativity. Greaterinvestment must also be directed at the nursery and primary level, especially in poor areas where

basic nutrition and educational facilities are still lacking.

Chinas demographic transition will create opportunities as well as challenges. Population aging

and the growing pile of pension funds are already forcing changes in the capital market and

financial services sector. Without well-functioning capital markets, savings cannot be put to

productive use and may even lose their value. An aging society will require a more sophisticated

investment sector, thereby presenting new opportunities for financial managers and investment

services. Another big growth area will be health care. Establishing better long-term insurance

plans will be critical in a country with few young family members to care and provide for the

old. A sound social safety net needs to be put in place before the economy feels the full force of

deteriorating demographics.

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References

1. David E. Bloom, Axel Boersch-Supan, Patrick McGee, and Atsushi Seike,Population

Aging: Facts, Challenges, and Responses, See from:

http://www.hsph.harvard.edu/pgda/WorkingPapers/2011/PGDA_WP_71.pdf

2. China's Aging Population, See from:

http://www.wikinvest.com/concept/China%27s_Aging_Population

3. Liping Hou, Challenges and Opportunities: The Impacts of Population Aging on

Marketing in China and the Chinese Economy, Southwestern University of Finance and

Economics, See from:http://www.na-businesspress.com/ijcm/HouWeb.pdf

4. Marcus Roberts, China Wrestles with the Effects of the One-Child Policy, See from:

http://www.mercatornet.com/demography/view/9013#sthash.zpjhlLXl.dpuf

5. The Chinese Celebrate Their Roaring Economy, As They Struggle With Its Costs - Near

Universal Optimism About Beijing Olympics, See from:

http://www.pewglobal.org/2008/07/22/the-chinese-celebrate-their-roaring-economy-as-

they-struggle-with-its-costs/

http://www.na-businesspress.com/ijcm/HouWeb.pdfhttp://www.na-businesspress.com/ijcm/HouWeb.pdf