Abstract
This paper is on impact of population demographics in United States and other developed countries. We will discuss the impact of population demographics on business firms. Also, how fertility rate affects business firm in United States and other developed countries.
What are the implications of the changing population demographics for business firms?
Developed countries are facing declining Birth rates leading to reducing average family size. With presence of greater number of non-workers (aged) in society the contribution to economy is reducing. Aged people consume more and generate less, thus leading to reduced demographic dividend. Implications of changing population demographics on business firms:
- Continuous growth in International trade with major improvements in transportation, communication and regulations for trade leading to growth in business across borders.
- Competition for talented individuals will increase making it harder and costlier to maintain talent pool.
- Major growth in offshore business unites and Information technology outsourcing.
- Growth in service industry like payroll, server hosting and email hosting.
- Addition pressure on government to provide aged and health care facilities due to aging population.
- Investments in new fields (airports, telecom, roads, infrastructure, railways among others) rather than overheated property and equity markets.
What is the replacement birthrate (total fertility rate) for the US, and other developed countries, and what does this mean for business firms?
The replacement birthrate (Total fertility rate) in developed countries stands at 2.1. United States has Total Fertility rate (TFR) of 2.0 (Yew, 2012).
Many new business firms will be formed which will lead to consolidation in industry. Operators in the industry will start buying out their competition to elevate their market share. Demographic population change due to aging population will lead many private businesses to move on as single or new ownership firms. With migrant population educating their children many move on to prestigious jobs at top companies rather than join family businesses. The number of private-owned businesses will either shut shops or get sold due to consolidation.
With time and many new owned businesses the supply of businesses will increase and by contrast strength of buyers will decrease. Though it is tough to predict implications of demographic change on firms, it will have a definite effect. Several opportunities will come up and many people will make a fortune while many will lose their fortunes with small businesses starting to operate in the global economy.
Conclusion
With presence of greater number of non-workers (aged) in society the contribution to economy is reducing. Aged people consume more and generate less, thus leading to reduced demographic dividend. With the current replacement birth rate and increase in aged population many new business firms will be formed which will lead to consolidation in industry.
References
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Yew, L.K. (10/16/2012). Warning Bell for Developed Countries: Declining Birth Rates. Retrieved from. http://www.forbes.com/sites/currentevents/2012/10/16/warning-bell-for-developed-countries-declining-birth-rates/
Batini, N. Callen, T. & McKibbin, W. (1/2006). The Global Impact of Demographic Change. Retrieved from. http://www.imf.org/external/pubs/ft/wp/2006/wp0609.pdf
Badkar, M. (17/5/2011). 10 Implications Of The Massive Demographic Shift Happening In Asia. Retrieved from. http://www.businessinsider.com/ten-investment-implications-from-asian-demographics-2011-5?IR=T#
Sayers, J. (9/2/2013). How demographic changes will impact organizations and managers. Retrieved from. http://bookboonglobal.com/how-demographic-changes-will-impact-organizations-and-managers/
