Pakistan International School Jeddah – ES

Name: Subject: Business 9609

Student ID: Class: AS: _____________ Date:
Topic:
Fill The Skill: 2 AS1.4: Business Objectives Marks: _____/12

Data Response Questions

South American Forest Corporation (SAFC)

SAFC is a public limited company. The new owners of SAFC are determined to make the business more
profitable. Serge, the new CEO, has stated that the business objective is a 15% return on capital. ‘We must
increase shareholder value,’ he told senior managers. Serge has suggested a new mission statement for the
business: ‘Responsibly produced and sustainable wood for future generations.’
The recent strategies adopted by the business suggest its operations are focused on profit not responsibility or
sustainability. SAFC has increased the rate of tree felling by 50% but no additional trees have been planted.
Compared to last year’s sales of $45m, sales this year increased by 15%. Annual costs, at $30m this year, only
increased by 5% as some child workers were employed in the poorest regions with forests. As the forests are in
very remote country, no pressure groups have gained access to them.
Serge is pleased with progress so far. He told his operations manager, ‘Ethics only makes sense for companies
dealing with consumers. However, we sell to big furniture makers and they don’t care where the wood comes from
or how it’s produced.’

Q 1: Evaluate whether SAFC’s future success depends on introducing ethical strategies in future. [12]

How to write an answer

Definition of ethical decision:
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Start with a new paragraph and explain each heading in details.

Points you can use: (Advantages)
• USP in a competitive industry (K)
• Build reputation and brand loyalty (Help in increasing revenue) – (An)
• Supports local communities (lead to positive publicity) – (An)

Point 1: ………………………………………………………………………………………………………………………………………………………………..

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Point 2: …………………………………………………………………………………………………………………………………………………………………..

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Disadvantages
• Competitive industry so it is more important to cut costs to keep prices as low as possible
• The cost of premiums to customers might have to rise if too much is spent on CSR projects
• Depends on how responsive to price changes consumer demand is.

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Evaluation
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Evaluation Point: Overall judgement in context is required such as an assessment of whether this insurance company
deals directly with final consumers or not. If it does not, its business customers might be more concerned with low-cost insurance than
with the social responsibility policies of insurance providers.