BUSI 3704 A: The Environment of International Business

Topic Review

What does Population Ageing mean for International Business?

December 2014

What does Population Ageing mean for International Business?
(see also lecture notes on this topic) (1) Manifestations of Global Population Ageing (2) What is population ageing? (3) What are the patterns of population ageing across the world? (4) What countries are specifically affected by population ageing? (5) How do societies experiencing population ageing compare with those not experiencing the phenomenon?
(2) Dynamics of Population ageing (a) What are the key factors giving rise to population ageing? (b) Who are the key actors in international business and public policy processes with regard to population ageing? (c) How do these key actors interact with each other? (d) What measures have been taken to mitigate against population ageing per se? (e) What measures have taken to alleviate the impacts of population ageing?
(3) Impacts of Population Ageing (a) What are the short-, medium- and long-term impacts of population ageing on individuals? (b) What are the short-, medium- and long-term (economic, political, legal, social, cultural, technological, environmental, etc.) impacts of population ageing on societies/countries? (c) What are the short-, medium- and long-term impacts of population ageing on the international business environment? (d) What are the short-, medium- and long-term impacts of population ageing on international business organizations?
(4) International Business Implications of Population Ageing (a) What are the short-term implications of population ageing on international trade and investments? (b) What are the medium-term implications of population ageing on international trade and investments? (c) What are the long-term implications of population ageing on international trade and investments? (6) Conclusions & Recommendations
The questions above are reproduced and responded to (in point form) in the tables below. The responses are not exhaustive. They are offered to assist/guide the reader to reflect on/about the issues at hand and to enable the reader to search for further responses or elaborate on the given responses.
Table 1: Manifestations of Population Ageing Question | Answer | What does the term/phrase “population ageing” mean? | When the proportion of population aged 60/65 years grows to more than 8-10% | Where and when did population ageing begin/start? | Has been growing over time; encompassing several countries | What are the patterns of population ageing across the world? | In 1950 there were 210 million people aged 60+ this figure rose to 705 million in 2007 | What countries are specifically affected by population ageing? | Developed and emerging countries/economies (e.g., Germany, Russia, Japan, China); but not all countries are experiencing the trend | How do societies experiencing population ageing compare with those not experiencing the phenomenon? | Dependency ratio increases as societies age. | What are the key aspects and issues of the population ageing? | * Social and economic burden on a decreasing proportion of people/population * Increasing public expenditures on social, health and medicare services * Shrinking labour force/pool | What is the symbolism of the population ageing? | Changing symbolic meaning of age | What actions have been undertaken by the key actors? | * Key actors & their activities: * Public policy makers (national & international) * Provide incentives to promote birth rates * Policy changes to encourage immigration * Private sector organization * Private retirement homes * Leisure activities * Not-for-profit organization * Retirement facilities * Leisure & entertainment activities | | | | | | | | |

Table 2: Dynamics of Population Ageing Question | Answer | What are the key factors giving rise to population ageing? | * Falling birth rates * Increasing life expectancy | What measures have been taken to mitigate against population ageing per se? | * Stimulate birth rates * Increase immigration | What measures have taken to alleviate the impacts of population ageing? | * Increased public spending for senior citizen services * Reviewing several public policies to support retirement living * Reforming retirement age policies | What is or has been the role of the mass media? | * Increased awareness of the ageing phenomenon * Educational messages | What is the role of technology in fostering population ageing and in mitigating it? | * Technological innovations in medical services and products have helped people live longer | What have been the responses of the various parties? What are the outcomes of these responses? | * Senior citizens: adoption of healthy living * Public authorities: public policy and program reforms * Civil society organization: new and growing number of services for seniors; advocacy/lobbying * Business organizations: capture the market segment | How have the governments in countries experiencing population ageing responded? | * Fiscal measures * Policy reforms * New programs | How have the regional/global bodies responded to issue of population ageing? | * Research in population issues * Programs for population | How has the phenomenon of population ageing evolved over time? | * Increasing total population that is ageing * Increasing number of countries with population ageing demographics | How do you foresee the phenomenon of population ageing evolve from now onwards?Will population ageing spread to other countries outside the countries currently afflicted? | More ageing in other countries not yet afflicted? | | | | | | |

Table 3: Impacts of Population Ageing Question | Answer | What are the short-, medium- and long-term impacts of population ageing on individuals? | * Gaps in services for an ageing population that an increasing number of individuals need * Personal life style adjustments for the aged and young too | What are the short-, medium- and long-term (economic, political, legal, social, cultural, technological, environmental, etc.) impacts of population ageing on societies/countries? | * Inter-generational conflicts and challenges * Shrinking labour force * Increasing international people migration as governments try to attract young & skilled people into their respective countries | What are the short-, medium- and long-term impacts of population ageing on the international business environment? | * New opportunities and threats in the EIB * Business opportunities/threats in serving ageing population * Business opportunities /threats due to increased immigration | What are the short-, medium- and long-term impacts of population ageing on international business organizations? | * Change in strategies * Changing human resources strategies & practices * Introduction of “new” products & services |

Table 4: International Business Implications of Population Ageing (Macro-level) Question | Answer | Implications for the macro-environment(s) | Political | * In ageing societies, politicians may be pressured, nudged or tempted to introduce policies that may “favour” senior citizens in the short term but not be in the public interest in the longer term with significant implications for governments and businesses; e.g., increased taxes to non-seniors and/or reduction of social programs. * Countries with younger populations may experience political instability as youths struggle to find work. | | Economic | New taxes may have to be introduced to pay for increased costs of publicly-funded pension and health-benefit programs (and most likely seniors may not bear the increased taxes as they vote while young people do not).Crowding out of public spending on infrastructure, education and other vital public services | | Financial | Shift in the direction of capital flows | | Legal | Laws and regulations may change and constrain businesses | | Social | * Chasms in society may be mended and/or accentuated; * Increasing/larger family role in long-term care. | | Cultural | Value changes? Revived respect for senior citizens? | | Technological | * Expose the limits of technology in the context of digital divide within and across nations * Use of new technologies to care for seniors | | Ecological | New ways of protecting/preserving the environment? |

Table 5: International Business Implications of Population Ageing (Meso-level) Question | Answer | Implications for Industry environment(s) | Birth of new industries? | | | Change in size of industries? | Some industries may grow while other may shrink | | Buyers’ bargaining power | May increase as choices increase | | Suppliers’ bargaining Power | Declining power as new sources of supply are sought globally | | Threat of Substitutes | Newer substitutes may increase | | Potential Entrants | New entrants to a lucrative seniors market segment | | Industry Competitors | Increasing international competition | | Complementary products | |

Table 6: International Business Implications of Population Ageing (Micro-level) Question | Answer | Implications for the organizational environment(s) | Organizational Structure | Lean and mean? | | Organization Strategy | National vs. regional vs. global strategies | | Organizational Practices | * HR: Retirement age changes as retirements are delayed; * benefits and challenges of managing a diverse workforce; * cuts in promised old-age benefits thru renegotiation of company pension plans; * lower benefits for new employees | | Organizational Reputation | Some may shine while others may not. | | Organizational Performance | Increasing productivity/profitability? |

Table 7: Conclusions and Recommendations Question | Answer | What preliminary conclusions can be drawn about the issue of population ageing? | While population trends can be reasonably forecasted, responses to predicted changes may not be easily forthcoming | | Population dynamics/outcomes matter for international business | | | | | What recommendations can be made to/for: | Governments within countries experiencing population ageing | Adopt smart public policies? What does this actually mean? Support for seniors citizens, young families, and immigrant families. | | Governments in countries not experiencing population ageing | | | International Organizations | | | Civil Society Organizations/NGOs | Supplement public/private services to seniors who may not have the means to help themselvesSupport young people to help increase birth rates | | Business organizations that have benefited from population ageing | | | Business Organizations that have not benefited from population ageing | |