Chapter 28 - Enviromental And Ethical Issues

Question 1

Social responsibility

Answer 1

When business decisions benefit stakeholders other than shareholders such as deciding to protect the enviroment

Question 2

Environment

Answer 2

Natural world

Question 3

Global warming

Answer 3

Gradual increase in overall temperature in the earths atmosphere caused by the rising levels of carbon dioxide and other pollutants

Question 4

Pressure groups

Answer 4

People who act together and want to change a business/government’s decisions/force them to adopt certain policies by taking action (eg. Boycotting)

Question 5

CSR

Answer 5

Corporate Social Responsibility

Question 6

How can business activities impact the environment (4)

Answer 6

-Improper Waste disposal pollutes rivers and seas
-Transporting goods burns fossil fuels which emits carbon and contributes to global warming
-Pollution from factory chimneys reduce air quality
-Aircraft jet engine emissions damage the atmosphere

Question 7

Externalities def. and list (6)

Answer 7

Way of looking at the wide impact of business decisions
Private costs and benefits
External costs and benefits
Social costs and benefits

Question 8

Private costs

Answer 8

Costs paid for by a business or the customer of the product

Question 9

Private benefits

Answer 9

Gains to a business or the consumer of a product

Question 10

External costs

Answer 10

Costs paid for by the rest of society as a result of business activity

Question 11

External benefits

Answer 11

Gains to the rest of society as a result of business activity

Question 12

Sustainable development

Answer 12

Development which does not put the living standards of future generations at risk
Achieve economic growth in a way that doesn’t harm future living standards

Question 13

Why should businesses be concerned about environmental issues (5)

Answer 13

-Business activity can permanently damage the environment
-Consumers are becoming socially aware demanding “environment friendly products)
-businesses may be targeted by pressure groups
-Businesses have a social responsibility
-Using non-renewable resources raises prices and leaves less for future generations

Question 14

Why should businesses NOT care about environmental issues (6)

Answer 14

-Expensive
-Government should pay to clean up pollution
-Lower sales due to higher prices
-Could make firms uncompetitive and sales go to non-environmentally friendly places anyway
-Prices increase to pay for the environmentally friendly policies
-Some believe business activity does not cause permanent damage

Question 15

Social cost

Answer 15

Private + external costs

Question 16

Social benefit

Answer 16

Private + external benefit

Question 17

What can businesses do for sustainable development (4)

Answer 17

• use renewable energy
• recycle waste
• develop environmentally friendly products + resources
• use fewer resources (through efficiently managing production

Question 18

Cost benefit analysis

Answer 18

When governments evaluate social costs and social benefits to approve or refuse business schemes

Question 19

Consumer boycott

Answer 19

When customers decide not to buy from businesses that do not act socially responsible

Question 20

Ethical issues and controversies (5)

Answer 20

• Bribes
• Child workers (legal in some places)
• Fix high prices with competitors
• Supplies that damage the environment (rain forest wood)
• Pay directors large dividends and owners profit payouts while reducing the workforce

Question 21

Main influences that make business respond to environmental responsibilities (3)

Answer 21

Conumers
Governments (passing laws)
Pressure groups

Question 22

How do customers make businesses respond to environmental pressures

Answer 22

They buy the goods, so they can just boycott
Create bad publicity
Businesses should care about what customers think
Force businesses to change production methods

Question 23

How do pressure groups make businesses respond to environmental pressures

Answer 23

Generate public support and media attention leading to customer boycotts and low sales. Works when the group is well organised and financed

Question 24

How does the government make businesses respond to environmental pressures

Answer 24

Through implementing legal controls such as pollution permits, making it illegal to locate in environmentally sensitive areas, to dump waste products into seas/rivers and stopping people from making unrecyclable products

Question 25

Benefits of making ethical decisions (5)

Answer 25

• Consumers may be against certain activities and buy from competitors instead
• Good publicity >Bad
• Long term profits could increase
• Easier to recruit the best workers and raise capital from investors
• less risk of legal action

Question 26

Limitations of making ethical decisions (5)

Answer 26

Higher costs (adults get payed more)
Need to set prices higher to cover costs
Some people only care about prices causing sales to fall
- Short term profits may fall
- What if the children’s family needed the money