U2-1 Social Costs & Benefits

U2-1 Social Costs & Benefits

1. Ethical and Environmental objectives

   • Is profit the main measure of business success?
     • Should a wider view be taken of what should be achieved?
   • More managers are setting E&E objectives as well as growth and profit
     • - Beliefs other than the aim of making money, or understand the importance of corporate image - Managers are considering the impact on society

2. Changing objectives

   • Laws on environmental protection are stronger
     • Breaching would mean heavy fines and bad publicity
   • Growing and widespread public support for action against dumping waste and climate change
     • Gain good publicity and customer loyalty
   • Consumers putting pressure on firms to be more ethical

3. Can reduce short-term profits

   • Paying wages above minimum is expensive
   • Not paying money bribes/ gifts to win contracts - lost sales
     • Significant in countries where it is accepted
   • Not forcing suppliers to reduce prices further to make them go out of business might mean paying more than others

4. Increase long-term profits

   • Other ethical firms will want to do business with you
   • Workers more motivated if higher paid and well treated
   • Government more likely to give contracts to ethical firms
     • Set a good example
   • Consumers may avoid unethical firms
     • Can boycott firms to show them
   • Suppliers will develop a good relationship
     • Offer best terms possible