2.2 Ethical And Environmental Considerations

Question 1

What are ethics?

Answer 1

Where a business makes decisions based on what is morally right rather than what is more profitable

Question 2

What are the benefits of behaving ethically?

Answer 2

• Higher revenue
• Improved brand/business awareness and recognition
• Easier to attract and recruit staff
• Increased employee motivation and staff retention
• New sources of finance are possible

Question 3

What are the drawbacks of behaving ethically?

Answer 3

• Higher costs
• Higher overheads
• Danger of building false expectations amongst consumers
• Bad publicity if business is found to be acting unethically

Question 4

How can poor ethical behaviour effect different stakeholder groups?

Answer 4

• Customers; Charging high prices when customers have no choice
• Suppliers; paying low prices and delaying payments
• Employees; paying low wages and using child labour
• Local community; creating pollution and inconvenience

Question 5

How can a business behave ethically in marketing?

Answer 5

• Designing products to reduce the damage they do to the environment
• Avoiding targeting children with advertisements for products with potentially harmful side effects
• Not using a dominant marketing position to set unacceptable high prices

Question 6

How can a business behave ethically in business operations?

Answer 6

• Buying resources from suppliers that are involved in ethical practices
• Manufacturing products that can be recycled and can be continued in the long term without damaging the environment

Question 7

How can a business act ethically in human resources?

Answer 7

• Not using zero hour contracts
• Offering employees the opportunity of high quality training
• Paying sufficient wages to allow a decent standard of living

Question 8

How can a business act ethically in finance?

Answer 8

• Spending money on community facilities
• Pay employees to undertake charitable work during working hours
• Paying correct taxes

Question 9

What ethical actions can lead to lower profits?

Answer 9

• Using environmentally friendly resources or fair trade products which are more costly
• Providing employees with high quality training
• Offering lower priced products to certain groups
• Acting in a socially responsible way by taking into account the needs of all stakeholders when making decisions

Question 10

What are fair trade products?

Answer 10

Products which customers pay higher prices and offer better trading terms. The aim is to improve living standards of people in poorer countries where the products are produced

Question 11

What is social responsibility?

Answer 11

An approach to managing business in which the interests of all groups in society are taken into account when making decisions

Question 12

What are external costs?

Answer 12

When a business’ activities result in harmful effects on other people not directly involved in production (e.g air pollution)

Question 13

What are the environmental considerations of a business?

Answer 13

• Impact on traffic congestion
• Recycling
• Disposing of waste
• Noise and air pollution

Question 14

What are the effects of traffic congestion?

Answer 14

• Air pollution
• External costs

Question 15

What business activities cause air pollution?

Answer 15

• Agriculture
• Manufacturing industries
• Transport
• Power stations

Question 16

What are scarce resources?

Answer 16

Inputs into the production process that are insufficient to meet needs

Question 17

What are non renewable resources?

Answer 17

Resources which are finite (only a limited amount exist)

Question 18

What is global warming?

Answer 18

Gradual heating of Earth’s surface, oceans, and atmosphere

Question 19

What are ethical objectives?

Answer 19

Targets set by a business with the intention of encouraging the business to behave in a morally correct way which may improve its reputation

Question 20

What is a pressure group?

Answer 20

A group of people with a common interest who influence public opinion and decisions by business and governments

Question 21

What is environmental responsibility?

Answer 21

Taking of decisions by businesses, consumers, governments and other groups with the intention of protecting the environment

Question 22

What is sustainability?

Answer 22

Methods of production which can be continued in the long term without damage to the environment

Question 23

What are some examples of sustainable production methods?

Answer 23

• Use of renewable sources of energy such as solar and wind power
• Using transport that cause less pollution
• Making products from recycled or renewable materials
• Producing goods and services without the use of chemicals and other products that damage the environment

Question 24

What is the disposal of waste?

Answer 24

The removal or dumping of unwanted raw materials, the byproduct of manufacturing or finished goods

Question 25

What is recycling?

Answer 25

The reuse of raw materials used in making products, often for many times. Examples include the reuse of glass, paper, and metals

Question 26

What decisions can consumers take to help protect the environment?

Answer 26

• Recycle products to reduce waste
• Buy environmentally friendly products
• Complain to businesses when they are seen to cause damage to the environment

Question 27

What are the advantages of environmentally friendly and ethical policies?

Answer 27

• Environmental reports can result in positive publicity for a business
• Ethical businesses can charge higher prices as customers place greater value on products which do less damage to the environment and stakeholder groups
• Introducing ethical and environmentally friendly methods of production can help a business win new customers by being different to its competitors

Question 28

What are the disadvantages of environmentally friendly and ethical policies?

Answer 28

• Increase costs
• If the business is found to be lying about their values, it will result in bad publicity