6.2 - Environmental and Ethical Issues Flashcards
how can business activity impact the environment
Business activity can lead to air pollution, carbon emissions, and global warming e.g., from factories and from vehicle emissions
what are externalities
a consequence of business activity that effects other parties
what are external costs and 3 examples
negative results of business activity on the rest of society e.g. air pollution causing health issues, noise/traffic from business will disturb local residents, business may be built on green areas limiting this for local recreational use
what are external benefits and 2 examples
These are positive impacts on the rest of society as a result of business activity e.g. the business provides jobs, business pay corporation tax which can benefit government and residents,
what is sustainable development
development that doesn’t put the living standards of future generations at risk
4 ways a business contribute to sustainable development
- use renewable energy by using solar panels
- recycle waste
- use fewer resources e.g., lean production so reducing the amount of unnecessary resources being used
- modifying products/develop new products in order to have environmentally friendly products and services e.g., using paper straws instead of plastic or having biodegradable packaging
how and why businesses might respond to consumers
Consumers may be concerned about the environment and so may not buy from business that are not environmentally friendly. By becoming an environmentally friendly business, business will gain a more positive brand image, CA, USP and customers.
how and why businesses might respond to pressure groups
Pressure groups may influence business to stop carrying out negative activities. E.g., using raw materials that are not environmentally friendly. Pressure groups attract media and public attention and so risk damaging brand image. Businesses may be forced to stop carrying out these activities to avoid the negative publicity.
how and why businesses might respond to the government
The government may force businesses to limit pollution, dumping of waste etc.
what are legal controls over business activity?
The Government can make certain actions illegal to minimize external costs e.g., laws against dumping waste and polluting too much, laws against using certain raw materials and assigning Pollution Permits.
what are pollution permits
licenses that allow a business to pollute only up to a certain level. This limits the amount of pollution being caused by a business.
3 ethical issues a business may face
- employ childing workers in developing countries
- buying raw materials that will damage the environment e.g. Wood obtained from cutting down rainforests
- offer bribes to the government to gain secret information/get contracts
why is there an issue in deciding about ethics or profit?
At some points businesses will need to decide what is more important- ethics or profit. E.g. using child workers, leads to low costs and more profit.
3 benefits of ethical decisions
- less risk of pressure groups and consumers highlighting the external costs-Better Brand Image, leading to USP/CA
- attracts investors/shareholders who want to invest in an ethical business, leads to more capital for firm
- less risk of legal action being taken against them
2 drawbacks of ethical decisions
- sustainable raw materials may be more expensive – might have to set higher prices to cover costs- not good for businesses selling price elastic goods
- certain consumers/target markets may not be interested in ethics- more focused on low prices/quality
