Section 6, Chapter 28

1. List four ways in which business activity might damage the environment.Four ways in which
business activity might damage the environment are:
- Aircraft jet engine emissions damage the atmosphere
- Pollution from factory chimneys reduces air quality
- Waste disposal can pollute rivers and sea
- Transport of goods by ship and trucks burns fossil fuels such as oil, which create carbon
emissions and may be linked to global warming and climate change
2. What are externalities? State two possible external cost from a decision to open a new
airport.
- An externality is a cost or benefit caused by a producer that is not financially incurred or
received by that producer. It concludes external costs and external benefits.
- Two possible external cost from a decision to open a new airport are:
● Parkland cannot now be used by local residents.
● Noise from the airplane will disturb the local neighbourhood.
3. State two possible external benefits from a decision to open a new airport.
- Jobs will be created.
- Other businesses may move into the area to provide services to the airport such as: cafeteria,
restaurant, souvenir,.....
4. Suggest three ways in which a steel – making business could become more ‘sustainable”
Three ways that can help business become more sustainable are:
- Use renewable energy - by fitting solar panels or buying energy that uses renewable sources
such as wind or tidal power.
- Recycle waste - by re-using water and other products that would otherwise be wasted or
disposed of, total use of resources is reduced.
- Use fewer resources - lean production is about managing production so efficiently that the
minimum quantity of resources is used.
5. What does it mean by pressure group? State two ways pressure group could try to affect
business decisions.
- Pressure groups are groups of people who act together to try to force businesses or
governments to adopt certain policies.
- Two ways pressure group could try to affect business decisions are:
● A numerous consumer boycotts make the business decrease sales.
They upload the information into the Internet and other social media channels and
receive public support.
● 6. Suggest two ways governments can use legal controls to protect the
environment.
● - Sell a permit to a factory that produces pollution. If it produces more pollution than the
permit allows, it must either buy more permits from ‘clean’ businesses or pay large fines.
Businesses producing much less pollution can sell their permits to ‘dirty’ factories.
● - Apply additional taxes on goods or factories that create pollution.

7. Two examples of ethical decisions that a clothing manufacturer might take:

● - Searching and selecting cautiously with good-quality and sustainable inputs.
● - Employing workers who have been old enough to follow the law.

Activity
28.1
● a. External costs are costs paid by the rest of society, other than the business, as a
result of business activity.
● b. Stakeholder groups will be worried about the external cost of a new chemical factory
because waste disposal from the factory can cause environmental pollution, especially
air and water pollution, and other serious environmental problems. The emissions from
the factory also affect the local people’s health.
● c. However, Starting a new chemical factory will increase the local employment level and
also contribute to the local economy by attracting more new businesses and providing
their services, or goods.
● d. If I were a government minister, I would allow the new chemical factory to be built
because of its potential growth. However, the factory has to be built far from the central
city, which doesn’t have any, or fewer residents staying. Moreover, it must ensure that it
is safe in business processes and abide by rules in disposing of waste.

28.2
● a. Sustainable development is the development that does not put at risk the living
standards of future generations.
● b. 3 initiatives taken by Thunweni Drinks make the business ‘more sustainable’ because
it reduces the factors that may lead to environmental problems and
● affect human health.
● c. He believes that the business now has a ‘competitive edge’ because the ‘green
environment’ trend is currently concerned by most people in the world. Thus, companies
using ‘green’ methods, such as replacing plastic packaging, producing recyclable
products,..., can attract more customers than companies aiming for fast production.

28.3
 ● a. Social responsibility is defined as the basic idea of giving back to society and
contributing to its betterment.
● 1. Two reasons for increased globalization:
● - Increasing free trade agreements and economic unions between countries have
reduced protection for industries.
● - Improved and cheaper travel links and communications between all parts of the world
has made it easier to transport products globally.
2. Benefit of business from globalization
● - Start selling exports to other countries opening up foreign markets
● - Open factories/operations in other countries (become a multinational)
● - Import productions from other countries to sell to customers in the ‘home’ industry
● - Import materials and components from other countries- but still produce final goods in
‘home’ country.
● Two benefits of globalization to a car manufacturer:
● - Increasing wealth and demand for cars in newly emerging economies.
● - Better economies of scale.
3. Threats are brought about to businesses by globalization:
● - Increasing imports into the home market from foreign competitors
● - Increasing investment from multinationals to set up operations in the home country
● - Employees may leave businesses that cannot pay the same or more than international
competitors
● Two threats of globalization to a wheat farmer:
● - The increased competition from cheaper imports from other countries can lead to lower
prices and reduced demand for locally produced wheat.
● - The potential loss of government subsidies and protectionist policies can make it
difficult for farmers to compete with larger, more efficient producers in other
● parts of the world.

4. The difference between tariff and quota:

● - Tariff: An import tariff is a tax placed on imported goods when they arrive in the country.
It usually leads to the price of the imported goods being increased,making them less
competitive than locally produced goods
● - Quota: An import quota is a restriction on the quantity of a production that can be
imported. This reduces the amount of these goods that can be imported and
● often leads to an increase in the price of imported goods as they become less available.
●
5. Governments might put controls on international trade because:
● - To protect jobs or specific industries.
● - To increase the prosperity of the nation.
● - To address market failures.
● - To achieve national goals and objectives.
●
6. A business benefits from becoming multinational:
● - Produce goods in countries with low costs
● - extract raw materials that the company may need for the production of refining
● - produce goods nearer the market to reduce transport costs
● - avoid barriers to trade put up by countries to reduce the imports of goods
- increase market share and expand into different market areas to spread risks
 ● - remain competitive with rival businesses which may be expanding abroad
● - gain government grants given to the business to set up operations in particular
countries.
7. What are the possible benefits and drawbacks to a country where multinationals
● operate?
- Possible benefits: new investment, more exports, fewer imports, jobs created, more
competitiveness, taxes paid to the government
● - A possible drawback: existing firms in danger, profits flow out of the country, often only
unskilled jobs created, influence the government and economy.
●
8. Currency appreciation and currency depreciation
● - Currency appreciation occurs when the value of a currency rises- it buys more of
another currency than before
● - Currency depreciation occurs when the value of a currency falls- it buys less of another
currency.
●
9. Currency depreciation of a country has an impact on its import and export prices
● - Depreciation - exchange rate fall => import price likely increase and export prices may
fall
● - Depreciation - exchange rate increases => import price may decrease and export
prices may go up.
29.1
● a. 3 benefits to IBM of globalization:
● - Increased customer satisfaction can increase sales
● - Enhanced customer support communications
● - Enhanced global information dissemination
● b. A potential risk to IBM from continued globalization: t could lead to increased
competition from other global players in the technology industry.
●
29.3
● Four multinational companies in Viet Nam: Unilever, Samsung, Pepsico Foods, and
Honda.