7.6b The Social Environment and CSR

Question 1

What are negative externalities also known as?

Answer 1

External costs

Question 2

Negative externalities definition

Answer 2

The costs on society of a business’ actions

Question 3

Do businesses pay for negative externalities?

Answer 3

No, they are covered by the public, the government or other organisations

Question 4

Examples of negative externalities

Answer 4

• Pollution

- Acid rain

Question 5

What can government intervention for negative externalities include?

Answer 5

• Legislation
• Making sure a license is needed to take part in an activity
• Taxation
• Fines

Question 6

Pressure group definition

Answer 6

An organisation formed by a group of like minded people who wish to exert their feelings

Question 7

Aim of pressure groups

Answer 7

To either raise awareness of, disrupt, or end activities they think are inappropriate

Question 8

Possible responses to pressure groups:

Answer 8

• Company agrees to change
• Resist pressure
• Government steps in and intervenes
• The public supports the pressure group and turns their back on the business

Question 9

What do businesses do when making a decision about a project to prevent government or pressure group intervention?

Answer 9

Conduct a cost-benefit analysis

Question 10

What do cost-benefit analysis’ do?

Answer 10

Work out both the financial and external costs and benefits of a project

Question 11

Two ways in which a business can take responsibility for its actions

Answer 11

1. Conduct contingency planning for any environmental problems they cause
2. Conduct an environmental audit

Question 12

What happens in an environmental audit?

Answer 12

• The business checks on the negative externalities that it causes to the environment
• The business can then identify what it is doing wrong, take responsibility for it, and find a way or correcting the problem and repairing the damage caused

Question 13

Opportunities of environmental responsibility:

Answer 13

• Marketing opportunities - green image e.g. The Body Shop
• Financial opportunities - may be easier to raise finance if it has strong environmental reputation e.g. the Co-Op Bank will not invest in firms that damage the environment
• HRM opportunities - a business may attract and keep better workers if they feel what they are doing is not damaging the environment

Question 14

What does CSR do?

Answer 14

Describes a company’s non-financial responsibilities to its stakeholders

Question 15

Key CSR issues include:

Answer 15

• Labour standards
• Environmental management
• Responsible sourcing

Question 16

CSR reporting definition

Answer 16

A process where a business assesses the impact its activities have on stakeholders and society

Question 17

The results of CSR reporting are divided into what four sections?

Answer 17

1. The workplace - how a business performs for its workers
2. The marketplace - is it dealing ethically?
3. The environment
4. The community - are they talking with the community and giving something back?

Question 18

Opportunities of CSR to a business:

Answer 18

• Improved customer loyalty
• Removal of negative externalities
• Decisions are made on what is best for society in the long run

Question 19

Threats of CSR to a business:

Answer 19

• Less efficient use of resources leads to increased costs
• A business may turn away from CSR when it is not generating lots of profit
• May just be a way of marketing their products

Question 20

Mendelow power-interest matrix definition

Answer 20

A tool used to judge which stakeholders a business should listen to

Question 21

What is the use of Mendelow’s power-interest matrix called?

Answer 21

Stakeholder mapping

Question 22

What are the axes on the Mendelow matrix?

Answer 22

Power and interest

Question 23

What does Carroll’s CSR pyramid identify?

Answer 23

Four areas of CSR that are all obligations and responsibilities a business should strive to meet.

Question 24

What are the four areas in Carroll’s CSR pyramid?

Answer 24

• Philanthropic responsibility - do what is desired by stakeholders
• Ethical responsibility - do what is expected by stakeholders
• Legal responsibility
• Economic responsibility