Ethical, Environmental and Legal Factors

Question 1

Define Business ethics

Answer 1

The moral principles that guide the way a business behaves

Question 2

What are the types of ethical issues

Answer 2

Environmental – Include emissions, deforestation, water and air pollution and waste disposal.

Animal rights – The care of animals being transported to different markets, animal testing for human products.

Treatment of workers – means the business will need to make choices over level of pay and conditions offered.

Question 3

Define Corporate social responsibility

Answer 3

Corporate social responsibility, where a business accepts responsibility for its actions and its social, economic and environmental impact on a range of stakeholders.

Question 4

Describe the relationship with profitability and ethics

Answer 4

The conflict between profitability and ethics is that business practices, decide whether to focus on the profitability of the product or the ethics such as

Profit-driven decisions may prioritise cost savings over environmental sustainability.

Businesses may engage in deceptive marketing practices to manipulate consumer perceptions.

Businesses may make changes to the product to make it more environmentally friendly even if it costs more.

Question 5

Evaluate ethical approachs

Answer 5

The benefits of an ethical approach may include higher revenues due to positive consumer support, improved brand and brand awareness and recognition, better employee motivation etc.

The drawbacks include higher costs and higher overloads, which will mean lower profit margins, the risk also may include losing its competitive advantage in terms of price leading to possible business failure.

Question 6

What is thoughts of an ethical approach to staff

Answer 6

Staff – likely to trust business more if it asks them to apply a fair approach to creating, producing and marketing their products, likely to improve staff motivation and enhance business reputation. Benefits also include staff receiving benefits such as rewards (profit sharing), this may not be all positive if this removes pay per commission.

Question 7

What is thoughts of an ethical approach to Customers

Answer 7

Customers – Perceptions of the business are likely to improve, and they may benefit from better products and longer-term reduction in the costs of purchasing products due to recycling, however customers won’t appreciate increases in the price of the products due to adapting to ethical practices.

Question 8

What is thoughts of an ethical approach to Shareholders

Answer 8

Shareholders – this will depend on what the shareholder wants from their share of the business. If the shareholders want long-term growth and sustainability, then ethical approach will be positive. If they want short-term gains through large dividends an ethical approach won’t be wanted.

Question 9

What do legal factors include

Answer 9

Includes employment, health and safety laws and environmental legislation. Legislation tends to act to restrict businesses in their operations and can create extra costs.

Question 10

Define and evaluate company law

Answer 10

Company law – concerns the legal rights and responsibilities of private and public limited companies. (+) creates a separate legal identity limiting liability (-) Extra costs

Question 11

Define and evaluate Employment and anti-discrimination law

Answer 11

Employment and anti-discrimination law – aimed to protect staff from discrimination or unfair treatment at the workplace (race, gender, age and religion) (+) staff treated better = more motivation (-) Extra costs.

Question 12

Define and evaluate Consumer protection

Answer 12

Consumer Protection – aimed at making sure that businesses act fairly towards their customers and consumers, products must be of satisfactory quality and the goods and services must perform the way it was advertised.
(+) customers able to ensure their right to be treated fairly
(-) some businesses may still be able to cut corners reducing the consumer welfare.

Question 13

Define and evaluate Competition Policy

Answer 13

Competition policy – Designed to ensure fair competition takes place in each industry, governments believe more competition = lower prices and better-quality goods. These laws ensure there is no anti-competitive practices.
(+) consumers will benefit from lower costs and increased choice
(-) May hurt local businesses from large businesses

Question 14

Define and evaluate Health and safety legislation

Answer 14

Health and safety legislation – Protects the health and safety of employees at work, workers health must not be affected while in work. (+) In the long term less absences and fewer compensation claims, staff will feel more safe and secure (-) adds costs to businesses to make sure staff are safe

Question 15

Define and evaluate Data protection

Answer 15

Data protection – Protects the privacy of individuals personal information which is usually stored on a computer system in the business. (+) customers data is safe (-) extra costs to make sure data is safe

Question 16

Define and evaluate Intellectual property

Answer 16

Intellectual property – Gives protection to those who create new or novel products and services, this is done by copyright and protecting brand names through trademarks

(+) protecting business profits from illegal copies

(-) high cost to the business to get its brand protected.

Question 17

Define and evaluate Minimum wage

Answer 17

Minimum wage – Requires employers to pay employees a minimum hourly wage, regardless of whether they are paid hourly, daily, weekly or monthly.

(+) Staff is guaranteed pay and can’t be exploited (-) some smaller businesses cannot sustain profits due to increased costs.

Question 18

How does legislation impact business activity

Answer 18

Legislation sets standards for business conduct, product safety, environmental protection, and labour practices.

Compliance with regulations can enhance consumer trust and protect stakeholders’ interests.

Compliance with regulations imposes costs on businesses, including compliance fees and regulatory burdens. Small enterprises may struggle to navigate regulatory requirements

Question 19

What does environmental factors include

Answer 19

Include sustainability, the businesses impact on its environment, pollution and carbon emissions.

Question 20

What are the costs of business activity on the environment

Answer 20

Air pollution – introduction into the air of a substance which has harmful or poisonous effects.

Water pollution - the contamination of water bodies, that has a negative impact on their uses

Noise pollution - harmful or annoying levels of noise.

Climate change - Climate change refers to long-term shifts in temperatures and weather patterns

Congestion – overcrowding and clogging

Destruction of the environment – Deforestation

Waste disposal - How businesses deal with waste

Question 21

How does the government intervene to protect the environment

Answer 21

limits and controls designed to restrict the negative impact of business activity.
A range of green taxes have been designed, not so much to punish businesses, but to encourage them to improve environmental practices.

These are often referred to as green taxes.

Question 22

Define pressure groups and how do they gain attention

Answer 22

Pressure groups are organisations formed with the objective of influencing government or business policy at local, national or international level.

Lobbying involves meeting with and discussing concerns with decision makers such as government ministers, MPs and senior management in large companies.

Direct action against businesses

To gain as much publicity as possible – the gaining of positive media attention is all-important.

Question 23

How does education protect the environment from businesses

Answer 23

Education in Wales – promoting recycling in the home, curriculum for Wales emphasises sustainability up to GCSE.

Question 24

How do businesses respond to environmental issues

Answer 24

Reduce Waste – Many firms aim to reduce the by-product in their processes as much as possible

Sustainable raw materials – Many manufacturers and retailers now create and buy products whose raw materials are sourced from sustainable stock.

Fall in Emissions – There is a legal requirement for businesses to ensure their manufacturing plants emit as little air pollution as possible (switching to air/wind).

Question 25

Evaluate the impact of businesses implementing environmentally friendly policies

Answer 25

Using less raw materials and packaging, initially this will cost to implement the change but in the long run it will reduce costs

Minimising or removing the use of hazardous chemicals, reduces the risk of harmful chemicals hurting human and animal health, removes the risk of fines and bad publicity

Using sustainably sourced raw materials, encourages customers to buy products and help ensure the business creates its products in a sustainable way

Creating a unique selling point, many businesses focus on sustainability and the environment