Ethics + External Environment 10 Mark Question

These include:

* The level of consumer spending

* New competitors entering the market.

Evaluate whether the changes in the level of consumer spending or the entry of new competitors into the market will have the greater impact on SOF.

Model Answer

Introduction

Changes in the external environment could have a big impact on SOF. They currently make and sell office furniture to the public and to businesses

Paragraph 1 (analysis of level of consumer spending)

If either group has more or less money available there will be a change in the amount of furniture ordered. If the level of consumer spending goes down then people may decide to keep their existing office furniture for a few years longer as it is a luxury to keep changing it, this will lead to a decrease in the amount of furniture sold by SOF. More people are working from home and they may have more money to spend and so may want to set up a good office at home and so there may be an increase in the amount of furniture ordered.

Paragraph 2 (analysis of new competitor)

We don’t know about SOF’s competitors but if there are more businesses doing the same thing in the area then SOF may see a decrease in sales. They may have to change their prices or improve their quality so as not to lose out to these competitors

Conclusion

I think the biggest impact will come from a new competitor entering the market because SOF sell most of its furniture to businesses rather than consumers so a change in the level of consumer spending would have less of an impact. If the business market decreased then the success of SOF could be at risk.

Ethics 10 Mark Question

If Nike find out that one of their factories in Indonesia has terrible working conditions and pays a really low wage to workers they can behave ethically and sort out this problem. However they might also choose to behave unethically and ignore the problem.

One possible consequence is that pressure groups might raise awareness of Nike’s unethical behaviour which could lead to a negative public image. This might result in a loss of many customers who would not want to be associated with an unethical company. This will result in a loss of profit for Nike. However some customers might not care about Nike’s ethical behaviour.

Another possible consequence is that the workers at Nike’s factory might feel under- valued due to Nike’s lack of ethics. This could lead to de-motivation which could negatively affect the amount of output as well as its quality. This reduction of output would increase Nike’s costs and therefore reduce profits. However there might not be many jobs in Indonesia so the workers may be forced to work hard.

Modern society is increasingly ethical and consumers are conscious of the types of companies they associate with. Therefore a negative public image resulting from Nike not behaving ethically would have major negative consequences for Nike.