• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Externalities

Extracts from this document...

Introduction

Externalities are known as the third party or side effects which affect business decisions. Basically externalities occur externally or outside the market, those who are affected are not involved with the decision. These effects are created from production or consumption goods and services. Externalities are divided into two categories: Negative externalities and Positive externalities. Positive externalities are the benefits to third party of business activity which means the effects benefit the business. Negative externalities in contrast are the negative effects of business activity; these effects are unfavorable to the business or the business causes these effects. Externalities have a huge impact on business development. Business development varies according to externalities. Positive externalities are most likely to benefit the business and increase development whereas negative externalities are more likely to contract business development or the business might encounter ethical issues depending on the externality. A positive externality include new infrastructure, research and development, research in technology, education, health provisions, increased employment, to name a few. New infrastructure will benefit the business and allow the business to grow and develop. Other positive externalities such as research and development will not only be useful to the business as they would gain more knowledge and understanding, the research could also be used for promoting the business. ...read more.

Middle

Noting that our resources are scarce, using up the environment will add onto the scarcity, which will cause the prices of goods and services to rise, therefore businesses will have difficulty pleasing consumers and the market is liable to inflation. Future generation should also be considered in this situation, as negative externalities affect future growth. The usages of many of these environmental resources are not even charged, such as overuse of waste facilities. Negative externalities could also dominate the positive externalities, such as anti-social behavior of people would cause inefficiency of labor productivity. Therefore these externalities containing costs and benefits contribute to business development. As a result, in the competitive market, beneficial or inadequate goods might be produced and consumed. As we have seen before, business development depends on externalities. How a business is affected by these externalities will be illustrated below by means of Bangladesh's business development. Most production systems can be an aspect of both positive and negative externalities. Some of the positive externalities that Bangladesh has are its agriculture system. These agriculture systems are extremely efficient and can produce large amounts of food. These agricultural systems can also produce outputs which can be used for energy. But the processing of the output in Bangladesh uses more man-labor than technology. ...read more.

Conclusion

Power supply is unreliable in the country. Businesses come across problems with lack of electricity and power and therefore they need their own back-up power which increases cost. Specific negative externalities could be the unavailability of gas supply in certain parts of Bangladesh such as Bogra and Khulna, this limits the growth of gas-based industries and obliges them to use an alternative resource, and again this increases cost and efficiency of labor in competition with other industries. Another negative externality is the strikes and blockades that are frequent in the country, whether aroused from rebelling against the government or the business. This highly affects the business as workers are unable to come to work, threatened by the resulting violence and blocking transport. As a result productivity is decreased. Although, Bangladesh earns huge profit from exporting goods such as ready made garments and such, the factories contribute to environmental hazards, which is a huge negative externality. Lastly, Bangladesh is relatively small for the large amount of population it restrains. Therefore as the economic growth increases, more buildings are being built, which not only contribute to environmental hazards but also to lack of space. As a result, the buildings are compiling up and are constricting. This causes increase in traffic and thus contribute to cost of time, for example, workers are likely to be late to work and therefore the productivity decreases, "time equals money". ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Business Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Business Studies essays

  1. This paper will concentrate on Apples Apple TV business, and its complementing iTunes business.

    The site also has link to buy the AppleCare extended warranty. Users can also check warranty status and also repair status if they have sent the product for repair. The site also has a user discussion board * 'Contact Apple Support' Site - The Contact Apple support site has a slew of support offerings.

  2. Analysing Job sectors in Canada. Identify trends in employment and occupational demand patterns for ...

    In 2003, this proportion barely exceeded 11%. In the United Kingdom, over 30% of jobs in the early 1970s were in manufacturing. In 2003, this proportion dropped to 12%. Over the long term, the proportion of service-sector jobs has increased while manufacturing's share has declined in almost all OECD countries.

  1. Impact and Cause of Absenteeism

    This might be, either to more hectic "working conditions - more demanding clients and heavier responsibilities - or to less stoical workers, who shirk at the first opportunity rather than embrace challenges as they come". It has shown that small organisations suffer significantly less absenteeism than their larger counterparts, with

  2. Corruption in India. This study focuses only on the corruption experienced by the ...

    validations it has undertaken over the last four years while undertaking similar studies in the country. The study has also benefited from consultation with leading experts in the field who have themselves been in the forefront of reforms and analyzed one or other aspect of corruption over the years.

  1. The Business Environment of Coca Cola

    The national and the state governments play minor roles. The main points in this economy are consumers and their buying decisions. In the real world, however, there is no such thing as a truly unfettered market economy, and so the term is used to describe economies which are largely dictated by market forces.

  2. Questions on Globalisation and International Trade

    In the case of Ecuador, trade sanctions certainly would be an option, as would publicizing the situation so that more consumers were aware of the conditions. In the end though, it is important to consider the effect of the sanctions or other measures on people like Maria who might lose their livelihood as a result.

  1. Marketing Plan. Launching a Karaoke Bar in Bangladesh

    The reason why we might consider them as our competitors is that they are already very popular among youngsters due to their quality food and service. Our competitive advantage will be our utterly new concept. We shall not only excel in karaoke but at the same time provide the most delicious meals in our bar.

  2. 7p's of Tourism In Bangladesh

    Chapter 2 Overview Of Tourism Sector In Bangladesh 2.1 Tourism Growth Global Perspectives International tourist arrivals for the first eight months of 2007 point to a continuation of the sustained growth rate experienced over the past years. According to the latest UNWTO World Tourism Barometer, this trend is likely to

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work