Ch 28 Environmental &

Ethical Issues
EXTERNALITIES
Positive Externalities
 New production technique can lead to better product
at reduced cost
 Knowledge can be shared with other businesses
 Improvement in infrastructure of the area the business
will set up
 Consumers have access to improved product
 Create employment opportunities
EXTERNALITIES
NEGATIVE EXTERNALITIES
 Air pollution
 Destruction of natural beauty if located close to
nature reserve
 Traffic congestion
 Destruction of ecology of the area
How do Businesses respond to
Environmental Pressures
 Using green manufacturing methods which produce
less waste and pollution
 Reducing use of energy
 Obeying government regulations and standards
 Follow sustainable business practices
 Taking legal action against pressure groups
Why businesses respond to environmental
pressures
The business reputation may be damaged
The business may be closed down if the business does
not follow the government regulations to use greener
methods
Inability to meet government regulations may create
legal problems
Pressure groups may oppose the business
Opportunities presented by environmental
pressures
Using energy efficient machines may lead to cost
savings
Government may provide financial incentives to
encourage firms to use environmentally friendly
methods of production
Publicity gained from greener methods may attract
new customers