Thursday, 26 September 2013

Social benefits and social costs

Dear All

these are the key terms for next lesson and the definitions as you requested will be added later today:

•Divorce between ownership and control -
when an LTD moves to a PLC the ownership
(shareholders) becomes separate from the control (Managers and Directors) 
•Ethical objectives -
a business aims to 'do the right thing' according to the values of the
managers even if this is not the most profitable way i.e. pay workers in low wage countries
above the minimum wage.
•Environmental objectives -
a business aims to protect the environment during its operation
i.e. recycle waste.  This will reduce social costs!
•Social benefit -
the benefit of a business activity, not just to the firm but to society as a
whole e.g. new jobs created by business expansion
•Social costs -
the cost of a business activity including both financial costs paid by the firm
and the costs on society e.g. factory pollution
•Dividend -
a small share of the allocated profit shared amongst all shareholders per share e.g.
10p per ordinary share  
•Opportunity cost -
the value of that which must be given up to acquire or achieve something
e.g. if an entrepreneur can make a profit of £20,000 per year without taking a wage but can
earn £25,000 per year working for someone else this is the opportunity cost of his or her
time 
•Dominant business -
a business with a large market share and can use this dominance to
set prices in the market 
•Corporate social responsibility -
when a growing business considers its social impact on the
local and larger community through its business activities and sets business objectives to
ensure that it continues to take responsibility for minimising this impact. 
•Limited liability -
a business which is seen as a separate legal entity to the owners.  A
business that can be sued as an organisation, own and own assets and is registered at
companies house.  Shareholders are not liable for the businesses debts

•To be tested next Tuesday 1st October 

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