Unit 6: External Influences on Business Activity

Question 1

in what ways do businesses impact the environment?

Answer 1

global warming, pollution (air, water, land), excessive use of natural resources that are becoming scarce

Question 2

what are external costs?

Answer 2

costs paid for by the rest of the society (other than the business) as a result of the business’ activity.
Examples: machinery noise, air pollution that leads to health problems among near residents, loss of land (it could have been a farm land before) etc

Question 3

what are external benefits?

Answer 3

gains enjoyed by the rest of the society as a result of a business activity.
Example: new jobs created for residents, government will get more tax from the business, other firms may move into the area to support the firm-helping develop the region, new roads might be built that can be enjoyed by residents etc.

Question 4

in what ways can businesses contribute to sustainable development?

Answer 4

• using renewable energy- so that resources are conserved for the future
• recycle waste
• use fewer resources
• develop new environment-friendly products and processes– reduce health and climatic problems for future generations

Question 5

how can environmental pressures (e.g. pressure groups) impact businesses?

Answer 5

they can create bad publicity for the firm, resulting in customer boycotts or other companies not wanting to be affiliated to them