Business Unit 6 ( Ethics )

Question 1

A) Define Ethics

B) What are some different ethical considerations for a business?

Answer 1

A) Concerned with what is right & wrong or behaving in a morally correct way.

B1) Treament of workers.
- Not employ child labour
- Pay workers a fair wage
- Ensure workers do not work too long hours

B2) Treatment of suppliers
- Avoid late payment of money they owe other business.
- Pay prices that are fair.

B3) Treatment of customers & marketing decisions
- Avoid making false claims about goods or services in advertisements

B4) Sourcing of materials
- Avoid buying from business that employ child labour
- Dont buy from suppliers who do not produce in a sustainable way.

Question 2

What are some possible Advantages & Disadvantages to a business behaving ethically?

Answer 2

A) Advantages;

1. Costs may be lower because workers who are paid fairly are well-motivate to productivity is high.
- Employees are also less likely to look for jobs elsewhere, increasing retention.

2. Sales may be higher because of a reputation for being ethical will lead to customer trust.
- Investments may be higher as some investors only want to invest in ethical businesses.

B) Disadvantages;

1. Costs may be higher because the business may have to pay more for fair wages, There are also costs involved in health & safet provison.

2. Sales may be lower because the business is honest with customers in its ads & doesnt sell goods the customers do not need.

Question 3

What are some different Enviromental consideration in businesses?

Answer 3

1. Sustainability

• When the production & sale of a product involves the use of renewable resources.( E.g. Using Wind turbines & Solar panels )

2. Waste Disposal

• Waste disposal is environmentlly friendly only if a business reduces, reuses or recycles its waste.

3. Pollution

• Pollution is the introduction of something harmful into the environment as a resule of business activity.

4. Climate Change

• Climate change occurs when weather patterns change or average temperature rise or fall.

Question 4

What are some Advantages & Disadvantages to a business for being environmentally friendly?

Answer 4

A) Advantages;

1. Cost may be lower as a business may have taken steps to use less energy reducing energy bills & waste disposal cost.

2. Sales may be higher because customers may prefer to buy from a business that cares about the enviroment.

3. Lower taxes and avoidance of paying fines may occur as the business creates less pollution.

4 A business may gain subsidies from the gov.t to help pay for enviromentally-friendly production.

B) Disadvantages

1. Production costs may be higher if materials produce in the environmentally friendly way are more expensive.

2. Sales may be lower if the business charges higher prices to cover any extra costs of environmentally-friendly production.

3. Capital costs may rise if the business invests in new machines & plant to produce in an enviromentally-friendly way.

Question 5

Define the Economic Climate

Answer 5

The Economic Climate refers to 2 things.

• Consumer income levels: the level of income received by people in a country is important for businesses as it influences how much money people have to spend on goods & services.
• Employment & Unemployment levels: employment & unemployment levels influence income.

Question 6

What are some possible impacts on business with rising income & employment?

Answer 6

1. Many business will experience an increase in sales as consumers have more money to spend.
- Businesses may increase production & profits may rise.

2. Sales of luxury goods will increase more than sales of necessities, as these are now more afforadable for people.

3. Businesses that produce cheaper goods & services may experience a fall in sales as people switch to better, more expensive goods.

Question 7

What are some possible changes in business strategy when income & unemployment falls?

Answer 7

1. Production

• The business may try to reduce costs by; Reducing waste, imporving worker productivity.

2. Human resources

• The business may try to reduce costs by: Imporving worker productivity, laying off workers to reduce the wage bill.

3. Finance

• The business may try to reduce costs by: Taking out cheaper loans, reducing its overdraft.

4. Marketing

• The business may try to increase sales by: Increaseing advertising, producing a cheaper product, lowering prices.

Question 8

A) Define Globalisation
B) How has Globalisation been made easier/causes of Globalisation?

Answer 8

A) The process by which business activity around the world had become increasingly interconnected.

B) Improved transport & reduced transport costs.
- Freedom of trade ( WTO ) / less tarriffs
- Improved technology
- Improved communication ( e.g. phone internet/Skype )

Question 9

A) Define Multinational Companies
B) What are some Advantages & Disadvantages of being an MNC ( To business & Host Country )

Answer 9

A) Businesses that operate in different countries round the world & where the production process is split across different countries

B1) Advantages To Host Country
- Creates Jobs & Increases incomes, helps habitants of the country.

• The Host country gains tax from buissness in their country.

B2) Disadvantages To Host Country
- Local businesses may not be able to compete with global companies, causing them to lose sales.

• Some companies may take advantage of lack of Regulation.

B3) Advantages To The Business
- Each country has more potential customers, which could increase sales.

• Lower production costs. ( e.g. because labour, land, propery, and technology is cheaper in some countries )
• Risk is spread, sales are not dependant on one country.

B4) Disadvantages To The Business
- Transport costs could be higher if they are produced and sold in different areas.

• Quality Control may be difficult as managers in HQ may not be able to check for work easily.

Question 10

Define the words:

A) Brand
B) Company
C) International Brand + Advantages

Answer 10

A) A word, logo, symbols of name used by a firm to help people recognise the product.

B) A legal entity with it’s own identity, operation & the ability to own many brands.

C) A recognisable brand that is known worldwide.
Advantages:
- Operating in many more countries, may increase sales

• Allows for development of a wider range of products
• More businesses may be wanting to set up partner ships or joint ventures.