Ethical and Environmental Objectives

Ethical and environmental objectives

We saw in unit 1 that some entrepreneurs may be considered social entrepreneurs. There reasons for starting their business were not only those shared by all entrepreneurs, but also include a desire to have a positive impact on society in some way. Do you remember …

oAnita Roddick & the Body Shop oJamie Oliver & his Fifteen restaurant

The Business Objectives these businesses set will reflect these ‘social considerations’. For these businesses, they seem to have a genuine belief in these social issues, like animal testing, fair trade, underprivileged children, global warming.

However for all businesses these issues have become increasingly important as society has become increasingly concerned with ethical & environmental issues.

Managers of large businesses recognise that if they have a negative impact on groups in society, then this will have a negative impact on their image and as such could lose them customers.

Some customers are now actively choosing businesses that pursue ethical & environmental policies and encouraging them to change the way they do businesses in order to have a positive impact on society.

Task 1

The Co-operative Bank has an ‘ethical policy’ which they follow:

The Co-operative Bank's Ethical policy will be extended to the £1bn of investments underpinning key insurance products. Since the Ethical Policy was introduced in 1992, The Co-operative Bank has withheld over £1billion of funding from business activities that its customers say are unethical. Whilst at the same time, increasing it's commercial lending sixteen fold to almost £9 billion. We will also extend our commercial lending in the area of energy efficiency and renewables from £400m to £1bn.

Now watch the video about the bank: http://www.youtube.com/watch?v=vq5m08lvd2g Why would a business change its objectives to become more ethical?

(a) Fill in the table below:

Reasons why they would BUT WHY WOULD THIS MAKE change their objective THEM CHANGE?

Stricter environmental laws are introduced

Widespread support from public against environmental damage

Consumers are demanding that products are made more environmentally

Boeing 787 Dreamliner

Watch the video: http://www.bbc.co.uk/news/business-17822413

(b) Make notes on the following page, using the ‘themes’ below:

 Materials made of?  Employment considerations?  Customer implications?  Environmental issues?  Local community issues?  Supplier knock-on effects? Video notes:

Social costs & Social benefits

Task 2

(a) Explain the term social cost. (2 marks)

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(b) Identify two possible examples of a social cost. (2 marks)

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(d) State two possible examples of a social benefit. (2 marks)

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…………………………………………………………………………………………………………… ………………………. Ethical Objectives & Profit

When considering your impact upon society and setting objectives for the business which maximise the positives and minimise the negative impacts on society, it is likely to increase the financial costs of the business.

As a result profits in the short run are likely to be reduced. However, as society recognises the business’s attempts, it is possible that performance increases and as a result profits actually increase in the long run.

Task 3

Virgin Media are trying to improve their ethical and environmental impact, with 6 ‘issues’. Your teacher will put you into groups of 2/3 (6 groups in total) and you will be allocated one of the ‘issues’ that Virgin is trying to address:

ISSUE LINK

Looking after our people http://www.virginmedia.com/about/cr/people.php Becoming the http://www.virginmedia.com/about/cr/customers_champion.php undisputed customer champion Helping our suppliers live http://www.virginmedia.com/about/cr/suppliers.php our values Being a responsible http://www.virginmedia.com/about/cr/service.php service provider Managing our http://www.virginmedia.com/about/cr/environment_managing.php environmental impact Understanding our role http://www.virginmedia.com/about/cr/community_role.php in the local community (a) GROUP task: Using the link allocated to you, fill in the table below.

Briefly explain the ISSUE you have been allocated (tip: use the italics link at the top of the page you look at!)

Explain briefly what the ISSUE you have been allocated is trying to achieve.

What will be the short-term effect on Virgin’s profits?

What will be the long-term effect on Virgin’s profits?

(b) INDIVIDUAL Extension task:

Comment on the view that these objectives are more to do with image than the true beliefs of Virgin’s owners & managers. (4 marks)

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