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IGCSEBusinessCambridge (CIE)Exam Questions6. External Influences on Business Activity6.2 Environmental & Ethical Issues

Environmental & Ethical Issues (Cambridge (CIE) IGCSE Business)

Exam Questions

2 hours16 questions
Easy
Medium
Hard
14 marks

Case Study

Raul owns a small farm that grows oranges. His farm is based in country Z. Like all primary sector activities, farming creates external costs and external benefits. Raul sells all 600 tonnes of his oranges direct to a drinks manufacturer in country E. The Government of country E plan to introduce either import tariffs or quotas. Raul said: ‘This might help country E’s Government achieve one of its economic objectives but how will it affect companies that export to country E?’

Outline one external benefit and one external cost that Raul’s business activity might create.

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22 marks

Define ‘externalities’.

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34 marks

Case Study

NLR manufactures a range of branded skincare products including hand cream. Packaging of the products is important. Like many businesses, NLR makes use of market segmentation. The Marketing Director knows the stage of the product life cycle can influence NLR’s pricing decisions. He is analysing market research data. This shows 85% of consumers expect businesses to respond to environmental pressures.

Outline two ways NLR might respond to environmental pressures.

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42 marks

Identify two ways business activity could have an impact on the environment.

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52 marks

Identify two ways a business could contribute to sustainable development.

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62 marks

Define 'business ethics'.

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72 marks

Definte 'pressure group'.

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16 marks

Case Study

Tom started ALB 5 years ago making trainers (sneakers) out of sustainable materials such as wool. One of ALB’s objectives is to protect the environment. As part of his research, Tom calculated some costs that he could use in his break-even analysis. An extract is shown in the below figure. ALB uses retailers to distribute its products. Tom thinks a successful entrepreneur has to be a good manager.

Break even analysis

Explain one advantage and one disadvantage to ALB of trying to protect the environment.

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26 marks

Case Study

RWB manufactures buses. 1,200 people work in its factory. All employees receive off-the-job training. RWB uses financial rewards to motivate its employees. Last year, RWB made a $1.7 million loss. The Managing Director said: ‘There are many external influences affecting our business, including changes in the level of unemployment and new legal controls over business activities which affect the environment.’

Explain two ways RWB might be affected by new legal controls over business activities which affect the environment.

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36 marks

Do you think manufacturing businesses should always respond to environmental pressures? Justify your answer.

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46 marks

Do you think a business being ethical will always lead to lower profits? Justify your answer.

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56 marks

Case Study

ACP manufactures computers. Being ethical is important to ACP. The business employs 3000 workers in its factory. ACP imports 65% of its raw materials. As internal users of accounts, the directors plan to analyse ACP’s financial performance using profitability ratios. The Finance Director thinks making a profit is more important for a business than managing its cash flow.

Explain one benefit and one limitation to ACP of being ethical.

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112 marks

Refer to Appendix 2 and Appendix 3 and other information. Consider the following three ways FO could use to contribute to sustainable development:

  • only use raw materials from sources that replace what they have used

  • only use packaging that can be recycled

  • only use electric vehicles to deliver products.

Which way should FO choose to maximise profit? Justify your answer.

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212 marks

Consider the following three ways Yasin could improve the ethical image of MB.

  • Buying all ingredients from local suppliers.

  • Using only environmentally friendly packaging.

  • Increasing wage rates to 20% above the legal minimum wage.

Which way would be most effective? Justify your answer.

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312 marks

Consider the following three ethical issues for the theatre.

  • Paying fair wages to employees

  • Only buying costumes produced in the local community

  • Purchasing all refreshments from suppliers that do not pollute the environment

Which ethical issue is likely to have the biggest effect on ET? Justify your answer.

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412 marks

Consider how the changes in the following three government legal controls could affect CC.

  • Increase in the minimum wage

  • More controls over what can be stated in advertisements

  • No waste plastic can be sent to landfill sites

Which change is likely to have the greatest effect on profit? Justify your answer.

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