New Horizon Business, Accounting and Financial Studies

Mindset for Examination – Compulsory Part

Compulsory Part Business Environment

Relevant Chapter CH3 Business Ethics and Social Responsibilities

1. Which of the following about a company’s stakeholders is/are correct?

(1) Stakeholders would be affected by the decisions of a company.

(2) Stakeholders would affect the decisions of a company.

(3) Stakeholders refer to the potential customers of a company.

A. (1) only

B. (1) and (2) only

C. (2) and (3) only

D. (1), (2) and (3)

Students should have a comprehensive

Students may think that the interest of a person or an entity influenced by aofcompany’s
understanding stakeholders.
decisions is called stakeholder.

(1) and (2) are correct. Stakeholders would affect or be affected by the decisions of a
company.
(3) is not correct. For example, suppliers and employees are also the stakeholders of a
company.

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New Horizon Business, Accounting and Financial Studies
Mindset for Examination – Compulsory Part

2. Which of following statements is correct?

(1) Business ethics have no clear definitions.

(2) There are no clear disciplinary procedures for violations in business ethics.

(3) The standard of business ethics never changes.

A. (1) and (2) only

B. (1) and (3) only

C. (2) and (3) only

D. (1), (2) and (3)

Students may think that business ethics are different from the law, i.e. they have no
clear definitions or no disciplinary procedures if they are violated, while the opposite is
true of the law. They may think that standards of business ethics would not change once
established.

(1) is correct. Different people have different views on business ethics. For example,
staff at fitness centres tries to force customers to sign contracts and believe this is an
acceptable sales technique.
(2) is correct. The violation of business ethics does notThe
usually
Trade result in legal
Descriptions procedures
Ordinance has been
enforced in Hong Kong to protect consumers
unless the law has been broken. by prohibiting incorrect trade descriptions,
false,over
(3) is not correct. The standard of business ethics changes misleading or incomplete
time with changinginformation
and misstatements in respect of goods
business environment. provided in the course of trade.

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New Horizon Business, Accounting and Financial Studies
Mindset for Examination – Compulsory Part

3. Happy Fried Chicken is a fast food chain selling fried chicken. The oil used for
cooking has recently been found to contain carcinogens. Which of the following are
possible adverse impacts on Happy Fried Chicken?

(1) The reputation of Happy Fried Chicken would be harmed.

(2) Happy Fried Chicken would face criminal prosecution.

(3) The sales and prospects of Happy Fried Chicken would be affected.

A. (1) and (2) only

B. (1) and (3) only

C. (2) and (3) only

D. (1), (2) and (3)

Legal sanction = criminal prosecution?

Students may think that this case can be treated as a crime. Therefore, Happy Fried
Chicken would face legal sanctions.

(1) is correct. Customers would lose confidence in Happy Fried Chicken.

(2) is not correct. There is not enough information that Happy Fried Chicken has
committed a criminal offence.
Studentsto
(3) is correct. Customers would quickly step going to Happy Fried Chicken canavoid
think about the reactions
of customers when they find out about
health risks. Happy Fried Chicken.

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New Horizon Business, Accounting and Financial Studies
Mindset for Examination – Compulsory Part

4. (a) List two stakeholders of a business. (2 marks)

(b) What are the consequences to a business if it does not take social
responsibilities for stakeholders mentioned in (a)? (4 marks)

(a) Employees; the government

(b) - The reputation of the business would be affected.
- Customers would not be interested in a business that did not fulfil its social
Students should refer to their answers in
responsibilities. part (a) when answering part (b).

(a) Customers, employees

(b) Customers: Customers may refuse to visit the business that does not fulfil its social
responsibilities.
Employees: Employees may go on strike and affect the production efficiency.
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New Horizon Business, Accounting and Financial Studies
Mindset for Examination – Compulsory Part

5. Many profit-making organisations make donations to charities. Explain the reasons

behind this from the perspective of social responsibility. (3 marks)

Many owners of profit-making organisations are helpful. Helping otherStudents

peopleshould
is a read the question
carefully and answer from the
source of happiness. Making donations makes them happy. perspective of social responsibility.

The community is an important stakeholder. (1) Making donations to charities is a way

Business
of fulfilling social responsibility. (1) This helps maintain a good has to fulfil
relationship social
with the
responsibilities to different
community. (1) stakeholders.

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