2.2 Ethical and Environmental Considerations

Question 1

What is meant by the term “ethics”?

Answer 1

When a business makes a decision based on what’s thought to be morally right or wrong.

Question 2

What is meant by the term “social responsibility”?

Answer 2

An approach to managing a business in which the interests of all groups in society are taken into account when making decisions.

Question 3

What are the ways a business can behave ethically?

Answer 3

• treating customer ethically.
• treating employees ethically.
• treating suppliers ethically.
• treating local residents and the wider community fairly.

Question 4

What is meant by the term “environment”?

Answer 4

The natural world in which we live.

Question 5

What is meant by the term “external costs of production”?

Answer 5

When a business’ activities result in harmful effects on other people not directly involved in production.

Question 6

What is meant by the term “non-renewable resources”?

Answer 6

Resources of which a limited amount exists such as coal and oil.

Question 7

What is meant by the term “global warming”?

Answer 7

The gradual heating of Earth’s surface, oceans and atmosphere.

Question 8

What are examples of social costs or poor ethics?

Answer 8

• exploiting labour or using child labour.
• providing false information to customers.
• bullying suppliers.
• water, air or noise pollution.
• destruction of the physical environment.

Question 9

What are examples of good ethics?

Answer 9

- paying fair wages.
- using sustainable materials.
- minimising environmental impact.
- prioritising animal welfare.
- not exploiting workers.
- considering all of the stakeholders in business decision.

Question 10

What is meant by the term “trade offs”?

Answer 10

When one or more things are given up in order to achieve an alternative.

Question 11

What are examples of a trade off?

Answer 11

• if a business behaves ethically, its giving up the opportunity to maximise profits.
• if a fair price is paid to suppliers in order to not exploit them then this will increase costs.
• providing customers with fair prices may lower revenue.
• using environmentally friendly production processes, with low pollution, can increase costs.