2.2 Environmental/ethical considerations

Question 1

Describe profit and ethics trade off.

Answer 1

Profit-focussed business may lower average unit costs, by using less ethical or environmental production methods or materials, but they may attract pressure groups, decrease sales and affect reputation in the long term.

However, ethical businesses may see increased sales and reputation in the long term, but general high costs means, if demands do not meet costs, the business will be in a loss and has to make more sacrifices or suffer risks of failure.

Question 2

Type of environmental considerations.

Answer 2

• Impact of traffic congestion (e.g. locate in less densely populated areas, but further from target market.)
• Recycling.
• Disposing of waste.
• Noise and air pollution (e.g. factories work only in daylight hours but that reduces productivity, and potential sales.)

Question 3

Things businesses can consider about sustainability.

Answer 3

• Global warming: (e.g. reduce carbon footprint, like using electric vehicles or less planes, but costly).
• Use of scarce resources (e.g. use renewable resources but costly).

Question 4

Describe what profit and sustainability trade off is.

Answer 4

Businesses who want to be more sustainable are likely to miss out on profit, as it is expensive and can affect their ability to be competitive, due to scarce money.

On the other hand, profit-focussed businesses may have to be less sustainable, however, they can lose customers and affect their reputation due to societal changes, ultimately affecting their sales in the long term.