Unit 6.2 - environmental & ethical issues

Question 1

State 5 negative impacts of business activity on environment

Answer 1

1. Pollution - incorrect waste disposal leads to water pollution, emissions from factories leads to air pollution, non-recylable plastic packaging, etc.
2. Use of natural resources - oil being used for fuel, cutting down trees to convert to farmland, leading to deforestation, etc.
3. Global warming - business acitivity like energy use and transportation produces greenhouse gases
4. Increased usage of land - land becomes unable to support habitats (desetification), food or water due to factors like irresponsible farming, mining & increased land usage
5. Congestion caused by transportation of goods

Question 2

Social costs formula

Answer 2

External costs + private costs

Question 3

Social benefits formula

Answer 3

External benefits + private benefits

Question 4

External cost

Answer 4

The negative impact/costs of business decisions on the local and global community, such as waste or pollution

Question 5

External benefits

Answer 5

The positive impacts of business decisions on local & global community, such as reduced unemployment, economic growth or improved services

Question 6

Private costs

Answer 6

The time, money and other resources a business spends on business activity/decisions

Question 7

Private benefits

Answer 7

The gains/benefits that a business makes from its activity, like revenue or improved brand image.

Question 8

Externality

Answer 8

A positive or negative consequence of business decisions on people/community not involved in the business activity.

Question 9

Sustainable development

Answer 9

Development which aims to meet present needs without compromising the ability of future generations to meet their own.
Involves using natural resources wisely, not harming the environment and ensuring everyone has access to basic resources.

Question 10

State 7 ways how businesses can support sustainable development

Answer 10

1. Recycle waste
2. Use recyclable packaging
3. Avoid contamining water
4. Use renewable energy sources
5. Use electric cars for transportation to reduce air pollution
6. Use local suppliers to avoid unnecessary transportation
7. Develop eco-friendly products/packaging

Question 11

Pressure groups

Answer 11

Groups/organisation that try to influence government and business policy in order to support a social cause or to have a more positive/sustainable impact on environment. They apply pressure by raising awareness through demonstrations, media coverage ,etc. and organised protests/boycotts which directly impact business sales.

Question 12

Legal controls + 3 things that governments can do

Answer 12

Governments may enforce legal controls on businesses when their region/national economy is not meeting sustainability/environmental goals. This may involve imposing taxes on businesses that are damaging to environment, banning certain chemicals or processes, offer incentives like grants to businesses that are meeting sustainability goals, etc.

Question 13

4 ways businesses can respond to environmental pressures

Answer 13

1. Make a formal promise to meet sustainability goals by certain date
2. Changing packaging to a more sustainable material
3. Make a statement on ways they support the environment
4. Research and developing sustainable practices

Question 14

4 reasons why a business might chose to respond to pressures

Answer 14

1. Improve public brand image by appearing as socially responsible, which can attract new customers and increase customer loyalty, allowing business to set higher prices
2. Opportunity to be sustainable can help businesses become more efficient with their time, energy and resources which can lead to lower costs
3. Response to legal pressure - forced to act based on laws or government incentives, which may make the business change in order to benefit from them
4. Less likely for pressure group action

Question 15

What does acting in an ethical way involve?

Answer 15

Aiming to make choices that do not have a negative impact on people/the planet, even if it causes less profit

Question 16

State 5 ethical issues

Answer 16

1. Child labour
2. Bonuses - business owners paying themselves large bonuses despite the business being in serious financial trouble
3. Harrassment/discrimination
4. Abuse of technology - employee/customer privacy being compromised
5. Chosing profits over quality of goods or greater good of community

Question 17

State 3 ways in which a business may respond to allegations of unethical behaviour

Answer 17

1. Make public apoplogy and implement changes
2. Focus on shifting public attention to ways in which they are ethical
3. Promote ways in which their current actions benefit the customer

Question 18

3 reasons why businesses set ethical objectives

Answer 18

1. Building customer loyalty & a positive brand image to satisfy consumer’s expectations of ethical behaviour. Potentially lead to higher competitiveness & profit
2. Developing a positive work environment + motivate employees
3. Reducing risk of legal trouble

Question 19

What is the one disadvantage of acting ethical/sustainable development?

Answer 19

Higher costs for business