AS BUSINESS CT2

SECTION A

Virgin Atlantic and British Airways to refund passengers

Two famous airlines have admitted a price-fixing agreement over fuel surcharges.
They agreed to fix the same surcharges so that there would be no difference
between them on the North Atlantic route. This clearly damaged passengers’
interests as there was no competition. This action was against US and UK
competition law. Both airlines have agreed to contact all passengers who flew
over the two-year period of the illegal agreement and arrange a refund for them.
The chairman of British Airways claimed that the price-fixing agreement had been
made by managers against the company’s strict code of ethics. ‘As we have
previously said, we absolutely condemn any anti-competitive activity by anybody,’ he
said.

Q1 Discuss whether a business acting ethically is likely to be profitable in

the long run. [11]

SECTION B

Q1 Define ‘Mission statement’ [2]

Q2 Define ‘MBO’. [3]

Q3 Identify and explain two benefits of communicating objectives to employees. [6]

Q4 Explain the possible benefits to a business of having an objective of corporate

social responsibility. [8]