Unit 3.5 revision Flashcards
What does business ethics mean?
Moral practices that businesses choose to follow but legally do not have to.
What does being socially responsible mean?
Acting in ways that show care and concern for all of society.
Who does a business have a responsibility to act ethically towards?
1) Employees
2) Environment
3) Customers
4) Consumers
Give 4 areas where business ethics are usually tested.
1) Advertising
2) Suppliers
3) Contracts
4) Pricing
A business cannot claim to be ethical firm if it ignores unethical practices by its suppliers by?
1) Use of child labour and forced labour
2) Production in sweatshops
3) Violation of the basic rights of workers
4) Ignoring health, safety and environmental standards
Give 5 advantages of acting businesses acting ethically.
1) Improved brand and business awareness and recognition
2) New sources of finance – e.g. from ethical investors
3) Higher revenues – demand from positive consumer support
4) Better employee motivation and recruitment/retain goof employees.
5) Avoid legal aspects
Give 5 disadvantages of acting businesses acting ethically.
1) Higher costs – e.g. sourcing from Fairtrade suppliers rather than lowest price
2) Higher overheads – e.g. training & communication of ethical policy
3) Reduces freedom to maximize profits
4) Time consuming to implement and train staff
5) A danger of building false expectations.
What are the 2 key influences on business ethics?
Individuals
Culture
What are the 4 approaches to business ethics?
1) The amoral business
2) The legalistic business
3) The repsonsive business
4) The ethical business
What is an amoral business?
Seeks to win at all costs
Anything is acceptable
What is a legalistic business?
Will obey the law but no more than that.
What is a responsive business?
Accepts that being ethical can pay off.
What is a trade off?
When something is given up in order to gain or achieve something else e.g investing in a business in order to make more profit.
Explain the two trade-offs between profits and ethical profits?
1) Acting ethically can lower business profits. Paying higher wages, recycling and only using ethical suppliers is likely to raise costs and lower profits.
2) Acting ethically can be appealing to customers and can motivate employees, leading to higher productivity and more sales, which will balance the cost of ethical policies.
What is a Pressure group?
Individuals or groups that seek to influence policies, laws and business behavior.
What issues do Pressure groups deal with?
Animal rights
Workers’ rights
The environment and world poverty.
What can pressure groups cause?
bad publicity for businesses that act unethically, which can damage their reputation.
Name 3 methods a pressure group could use to persuade a business to act responsibly.
Protests
Lobbying
Boycotting products
What is a business supply chain?
The steps involved in the manufacturing and distribution of goods.
What are 2 Short Term effects a business
can have on the Environment?
1) Air, noise and water pollution through manufacturing and industry
2) Traffic congestion through transport and deliveries.
What are 2 Long Term effects a business
can have on the Environment?
1) Climate change (global warming)
2) Depletion (running out of something) of land, food and natural resources.
List 5 different ways a business can try to reduce their damage to the environment.
1) Stop burning fuels
2) Reduce carbon footprint
3) Recycling ( reduce the amount of waste going into landfills and encourage households to do the same)
4) Using smaller font (less paper)
5) Using energy efficient light bulbs less energy being wasted.
Give 4 advantages of a business becoming environmentally friendly.
1) Increase business opportunities to differentiate their products to meet customer needs and make them greener
2) Reduces utility costs by using technologies that are energy efficient and less wasteful.
3) Premium prices and improved public image
4) Government/ council tax incentives
Give 3 disadvantages of a business becoming environmentally friendly.
1) Temporarily decrease profits
2) Takes time and effort
3) Decrease productivity ( If your purchasing department is required to search for and verify the green status of products they will spend more time purchasing than when they could just purchase the cheapest goods and services.)
What does international trade mean?
is the exchange of goods and services between different countries.
What is a developed country?
Countries with a relatively high income per person
What is a developing country?
Countries with a lower income per person than developed countries
What is an import?
An import is the purchase of a good or service from a foreign business that leads to a flow of money out of the
UK. The UK buyer will have to change pounds into the seller’s currency to make the transaction.
What is an Export?
An export is the sale of a good or service to a foreign buyer that leads to a flow of money into the UK. The
foreign buyer will have to change their currency into pounds to complete the purchase.
What are the following three factors have an affect on the level of development in a country,
Average incomes
Wages and prices
Quality and Technology of products:
What is a tariff?
a tax on imported goods
What is a Quota?
a physical limit that is put on imported goods
What is Protectionism?
tariffs and quotas used by a country to protect its own firms
What is Subsidy?
where a government gives money to a firm to help it lower its costs
Explain one way in which a business, such as Tesco, might be affected by a successful pressure group campaign?
A pressure group campaign could reduce Tesco’s revenues. This is because the pressure group will raise awareness of Tesco’s activities in paying farmers low prices for their produce. This might encourage consumers who care about this issue to switch to a different supermarket.
Give other ways in which a business, such as Tesco, might be affected by a successful pressure group campaign?
• Damage to brand name.
• Increased costs through cutting down on
waste, packaging, changing the method of
electricity generation (assuming pressure
group is successful).
• Lost revenue.
• Loss of market share.
Tesco has taken steps to reduce the effect of its operations on the environment. Assess two benefits to Tesco from doing this?
• Makes Government regulation less likely.
• Enhances the brand.
• Will allow Tesco to target more market segments.
• Gives Tesco a USP.
• Adds value
• Premium pricing
• Increased profit margins.
Disadv:
Will increase costs.
• Supermarket industry is very price competitive.
• Lower income consumers may switch supermarkets.
• Could lower profits.
• Consumers may not care, they are just interested in
price.
What is International trade?
The flow of goods and services between countries
What are the benefits of international trade?
1) Target different target markets(meet needs
2) Creates jobs
3) Greater choice for consumers
4) cheaper to source from abroad
5) Build relationships with countries (economies of scale–sell cheaper products— customer happy)
6) Increase economic activity and growth
7) Way out to intense competition in domestic market
8) Increase competition (cheaper products— disopable income increases)
What are the disadvantages of International trade?
Can reduce demand for domestic products (firms and industries being forced to shut down due to competition)
2) Delay in delivery of goods (transport problems)
3) Language barrier
What is Protectionism?
It represents any attempt by a government to impose restrictions on trade of goods and services. This aims to protect domestic businesses.
What are 3 ways the UK government tries to protect UK businesses from foreign competition?
Quotas
Tariffs
Export subsidy
What is a Quota?
A limit on the amount of imported goods allowed in country
What is a Tariff?
A taxed charged on goods imported into a country.
What is Export subsidy?
A payment from government to encourage domestic production by lowering their costs abroad.
What is a domestic subsidy?
It is paid by the government to home producers to help keep price competitive compared with foreign imports
What are 3 advantages of Import protection?
1) Allows small businesses to grow as they don’t have to compete multinational
2) Countries develop a variety of new industries, more local jobs.
3) Revenue money for government
What are disadvantages of Import protection?
1) Less goods and services to purchase
2) Price of imported goods rise due to decreased supply
3) The consumers will have to pay more money
4) Consumers will have to pay more money.
Explain how export subsides effects businesses?
FIND answer
Give examples of how a business might take measures to avoid government intervention?
1) might move to a country where corporation tax is lower
2) Might produce products in countries with a lower minimum wage
What is a Minimum wage?
The lowest amount a business can legally pay its employees.
What are benefits to minimum wage?
1) Workers now get paid a fair day’s pay for a day’s work
2) Ensure quality at lowest level ( psychological needs — leading to motivation and higher productivity)
What are benefits to minimum wage?
1) Workers now get paid a fair day’s pay for a day’s work
2) Ensure quality at lowest level ( psychological needs — leading to motivation and higher productivity)
3) Attracts better quality workers
What are drawbacks to minimum wage?
1) Costs of firm rises
2) some workers are made redundant because businesses cannot afford to pay them
3) Less competitive (as they have to afford other costs such as wages)
What are benefits of Health and safety?
1) Lower staff turnover
2) Good reputation - repeat purchase
3) Fulfills physiological needs
4) Increases productivity
What are drawbacks of Health and safety?
1) Expensive to implement
2) Time/ effort involved
3) some staff resent the changes
What are benefits of maternity rights?
1) Increase motivation of females
2) More females want to work for the company
3) Ethical
What are drawbacks of maternity rights?
1) Increased costs for the business
2) Results in lower profits
3) Have to employ temporary staff (who may not be as good)
What is the EU?
A group of European countries whose governments work together to make decisions on social and economic policies for its members.
What is the Government?
The group of people that run the system by which a state or community is controlled
What is the effect of businesses being in the EU?
Easier trading freely
What is the effect of workers being in the EU?
Work anywhere in the EU
What is the effect for people travelling abroad being in the EU?
Easier to access healthcare
What are the 4 main taxes?
Corporation tax
VAT
National insurance contributions
Income tax
What is Corporation tax?
is a tax on company profits. Paid by limited companies (higher rate)
What is VAT?
added to goods and services and everyone pays it.
What is National insurance contributions?
contributions are payments made by both the employee and the employer. They pay for the cost of a state pension and the National Health Service.
What is Income Tax?
taken off an employee’s salary on small business Employees, sole traders and partnerships pay this.
Using your knowledge of business, assess whether it was right for the government to increase the national minimum wage to £5.80 per hour. (Benefits)
1)Minimum wage has only increased by 7p which is
1.2%, so business costs are barely being affected.
2) Will make work more attractive to the
unemployed.
3)Reduces exploitation of workers in low skill
industries(More ethical)
4) improve fortunes of workers.
Using your knowledge of business, assess whether it was right for the government to
increase the national minimum wage to £5.80 per hour. (Drawbacks)
1) Increases costs.
2) Increases the chances of a business relocating
overseas.
3) May increase unemployment.
Explain one benefit to a business of the UK being apart of the European union?
Being apart of the EU encourages free trade between countries. This means that UK businesses can export their products abroad without any taxes imposed. As a result, opportunities for expansion and growth are created.
When taxes are high what does it mean to consumers?
Consumers spend less
When taxes are low what does it mean to consumers?
Consumers spend more
When taxes are high what does it mean to Busiensses?
Profits and dividends fall
When taxes are low what does it mean to businesses?
Profits and dividends rise.
