UNIT 6 - Chap 28: Environmental and ethical issues

Question 1

How businesses can impact the environment

Answer 1

Business activity can lead to air pollution, carbon emissions and global warming e.g from factories and from vehicle emissions

Question 2

What is Externalities?

Answer 2

= are a consequence of a business activity which affects other parties

Question 3

What are External cost?

Answer 3

External cost = negative impacts on the rest of society as a result of business activity e.g air pollution causing health issues, noise disturbing local residents, business built on green areas limiting this for local recreational use.

Question 4

What are external benefits

Answer 4

External benefit = positive impact on the rest of society as a result of business activity e.g providing jobs, paying corporation tax which can benefit government and residents

Question 5

What is Sustainable development?

Answer 5

= the development which doesn’t put at risk the standard of living for future generations

Question 6

How a business can contribute to sustainable development? (4)

Answer 6

1. Use renewable energy
2. Recycle waste
3. Use fewer resources e.g lean production
4. Modify products to be environmentally friendly

Question 7

How and why businesses may respond to environmental pressures and opportunities? (3)

Answer 7

1. Consumers may be concerned about the environment so won’t buy from a non-eco friendly business. By being environmentally friendly the business will gain a more positive brand image, CA, USP and customers
2. Pressure groups may influence businesses to stop carrying out negative activities e.g using unsustainable raw materials. pressure groups attract media and public attention and so risk damaging brand image. Businesses may be forced to stop carrying out these activities to avoid negative publicity
3. The government may force businesses to limit pollution, dumping of waste, etc

Question 8

what are the 2 Legal things the government controls over business activity? (2)

Answer 8

1. The government can make certain actions illegal to minimise external costs e.g laws against dumping waste and polluting too much, laws against using certain raw materials and assigning pollution permits
2. Pollution permits are licenses that allow a business to pollute only up to certain level. This limits the amount of pollution being caused by a business

Question 9

Ethical issues a business may face (3)

Answer 9

• Employing child workers in developing countries
• Buying raw materials that will damage the environment e.g wood obtained from cutting down rainforests
• Offer bribes to the government to gain secret info/get contacts

Question 10

Benefits of the ethical issue (3)

Answer 10

• Less risk of pressure groups and consumers highlighting the external costs - better brand image - usp/ca
• Attracts investors/shareholders who want to invest in an ethical business, leads to more capital for the firm
• Less risk of legal action being taken against them

Question 11

Drawbacks of the ethical issue (3)

Answer 11

• Sustainable raw materials may be more expensive - might have to set higher prices to cover costs - not good for businesses selling price elastic goods
• Certain consumers/target markets may not be interested in ethics - more focused on low prices/quality

Question 12

Examples of external costs? (3)

Answer 12

1. air pollution causing health problems,
2. noise/traffic from business will disturb local residents,
3. business may be built on green areas limiting this for local recreational use​

Question 13

Examples of external benefit? (2)

Answer 13

1. the business provides jobs
2. business pay corporation tax which can benefit government and residents