![Unit 2: Business Environment Question Answers [FYUGP BCom 1st Semester Gauhati University]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZHTHtMPgerLc_MiUOPFbOmjNY1xK9MG3KkXJ4OEIS5x3o8Km8jGkXwN6uSttmK5PG31G0V0I5dqVkVgEn6X7SBd5FQ96j5er6GRUZNf1iYEO2ZuN95z5paxMSPbvSLfG_w0tUifAbDYDR-4og7-2s_DNVjQJ5gcJi0B124U0WutjCYyGQcBCO27KnL6bC/s16000-rw/1000336364.webp "Unit 2: Business Environment Question Answers [FYUGP BCom 1st Semester Gauhati University]")
Unit 2: Business Environment - Most Important Question Answers
Section 1: MCQs Type Questions (1 Mark Each)
Ethics is a part of philosophy that studies: [GU BCom: 202i4]
a) Business operations
b) Production
c) Morality
d) Behaviour of employees
Answer: c)Business ethics deals primarily with: [GU BCom: 2024]
a) Social responsibility
b) Pricing of products and services
c) Moral obligations
d) Being unfair to the competition
Answer: c)Business and society are mutually dependent. (True/False) [GU BCom: 2022]
Answer: TrueManagers are directly accountable to society for the profit. (True/False) [GU BCom: 2022]
Answer: FalseWhich of the following is a key component of the micro business environment?
a) Government policies
b) Customers
c) Economic trends
d) Global trade agreements
Answer: b)Which layer of the business environment includes competitors and suppliers?
a) Micro environment
b) Meso environment
c) Macro environment
d) International environment
Answer: b)Which of the following is an element of the macro business environment?
a) Company employees
b) Technological advancements
c) Marketing intermediaries
d) Local community
Answer: b)Social responsibility of a business is primarily concerned with:
a) Maximizing profits
b) Fulfilling obligations to stakeholders
c) Reducing operational costs
d) Expanding market share
Answer: b)Which of the following is an example of an international business environment factor?
a) Local tax policies
b) Cultural values of the domestic market
c) Foreign trade regulations
d) Supplier relationships
Answer: c)Business ethics primarily focuses on:
a) Legal compliance
b) Moral principles guiding business conduct
c) Financial performance
d) Employee recruitment
Answer: b)
Section 2: Questions for 2 Marks
1. Write two arguments in favour of social responsibility. [GU BCom: 2024]
i) It helps in creating goodwill and public image for the business, leading to long-term success.
ii) It ensures sustainable growth by protecting the environment and considering the welfare of society.
2. What is the economic environment of a business? [GU BCom: 2013]
The economic environment of a business refers to all those economic factors like national income, inflation, interest rate, employment level, taxation policy, and economic growth that affect the functioning and decision-making of a business.
3. Write two features of the meso environment. [GU BCom: 2024]
i) It acts as a link between the micro and macro environment of business.
ii) It includes industry-related factors like competitors, suppliers, customers, and trade associations.
4. Define business ethics and its importance in business.
Business ethics refers to the moral principles and values that guide the conduct of business activities. Its importance lies in building trust with stakeholders, promoting fairness, reducing legal issues, and ensuring long-term success.
5. What is meant by the micro business environment?
The micro business environment refers to the internal and immediate external factors that directly influence a business, such as customers, suppliers, competitors, employees, and shareholders.
6. Explain two key elements of the macro business environment.
i) Political Environment – It includes government policies, laws, and regulations that affect business activities.
ii) Technological Environment – It relates to innovations, modern technology, and research that influence production and services.
7. What is the role of social responsibility in business operations?
The role of social responsibility is to balance profit-making with the welfare of society. It ensures ethical practices, environmental protection, consumer satisfaction, and overall sustainable development.
8. Mention two ethical issues faced by businesses today.
i) Unfair trade practices such as false advertising or misleading claims.
ii) Exploitation of workers by providing low wages and poor working conditions.
9. What is the international business environment? Give one example.
The international business environment refers to the conditions, factors, and forces in foreign markets that influence global business operations. Example: Trade relations between India and the USA.
10. How does the meso environment differ from the micro environment?
The meso environment connects the micro and macro levels, including industry factors like suppliers and competitors, while the micro environment consists of immediate internal and external factors such as customers, employees, and owners directly linked to the business.
Section 3:
a) Questions for 5 Marks
1. Explain the concept of the micro business environment with examples.
Answer: The micro environment refers to the immediate environment of a business that directly affects its operations and performance. It consists of actors and forces close to the organization that the company interacts with on a regular basis.
Key Elements:
Customers: They are the central focus. A company must study their preferences, tastes, and buying behavior. Example: Flipkart offers discounts and fast delivery to attract Indian customers.
Suppliers: Provide essential raw materials, goods, and services. Strong supplier relations reduce risks of shortages. Example: Maruti Suzuki depends on auto part suppliers for production.
Competitors: Businesses must analyze rival strategies to remain competitive. Example: Pepsi and Coca-Cola constantly compete through marketing campaigns.
Employees: The skills, training, and motivation of employees directly impact productivity and quality.
Shareholders/Investors: Provide financial support and expect returns. Their confidence ensures smooth functioning.
Thus, the micro environment directly influences a company’s day-to-day decision-making.
2. Discuss the key components of the meso business environment and their impact on business operations.
Answer: The meso environment acts as a bridge between the internal (micro) and external (macro) environment. It refers to the industry or sector-specific environment in which firms operate.
Key Components:
Industry Associations: They set norms, lobby with government, and protect industry interests. Example: FICCI and CII provide support to Indian industries.
Trade Unions: Influence wage levels, working conditions, and employee welfare. Their strikes can affect production.
Market Intermediaries: Distributors, retailers, and agents help in product distribution and customer reach.
Competitor Networks: Rival firms within the same industry shape pricing, innovation, and service standards.
Local Communities and NGOs: They expect companies to act responsibly, provide employment, and contribute to social development.
Impact: Businesses must adjust policies to industry trends, competitor behavior, and labor relations to remain sustainable.
3. What are the elements of the macro business environment? How do they influence business decisions?
Answer: The macro environment consists of large external forces beyond a company’s control that affect all organizations in an economy.
Elements and Influence:
Political: Government policies, taxation, and political stability affect investment. Example: GST changed pricing structures for Indian firms.
Economic: Inflation, interest rates, and income levels influence demand. Example: During recession, demand for luxury goods falls.
Social: Population trends, lifestyles, and cultural values affect products. Example: Rise in fitness awareness increased demand for organic food.
Technological: Innovations like AI, digital payments, and automation improve efficiency. Example: Growth of e-commerce due to UPI payments.
Legal: Laws regarding labor, competition, and consumer protection affect operations. Example: Strict pollution laws impact manufacturing industries.
Environmental: Climate change and sustainability concerns force firms to adopt eco-friendly practices.
Thus, macro factors guide long-term strategies and policies of businesses.
4. Explain the role of the international business environment in shaping global business strategies.
Answer: The international business environment refers to all global forces that influence a company’s ability to operate across borders.
Role in Strategy Formation:
Global Competition: Forces companies to improve quality, reduce costs, and innovate. Example: Samsung competes with Apple worldwide.
Trade Policies & Agreements: Tariffs, WTO rules, and free trade agreements guide entry into new markets. Example: ASEAN Free Trade Area benefits Indian exporters.
Cultural Differences: Businesses adapt to local traditions and values. Example: McDonald’s in India offers vegetarian menus.
Currency Fluctuations: Exchange rate changes impact pricing and profits in international trade.
Technology Transfer: Firms adopt modern technology from developed countries to remain competitive.
Geopolitical Risks: Wars, sanctions, and trade tensions disrupt supply chains and market access.
Thus, the international environment pushes firms to adopt globally competitive and adaptive strategies.
5. Discuss the importance of business ethics in maintaining organizational reputation.
Answer: Business ethics means conducting business activities with fairness, honesty, and integrity. It plays a key role in shaping an organization’s long-term success.
Importance:
Customer Trust: Ethical companies attract loyal customers. Example: Tata Group is known for honest business practices.
Employee Morale: Workers are more committed and motivated in a transparent workplace.
Investor Confidence: Ethical governance attracts investors who value stability. Example: Infosys is trusted for its strong corporate governance.
Legal Compliance: Following ethical standards prevents legal disputes and penalties.
Sustainable Growth: Ethical firms focus on long-term welfare rather than short-term profit.
Positive Brand Image: A strong ethical reputation becomes a competitive advantage in the market.
6. What are the key arguments in favour of social responsibility of businesses? [GU BCom: 2022]
Answer:
Social responsibility means that businesses should not only focus on profits but also contribute to the welfare of society.
Key Arguments in Favour:
Long-term Interest of Business: By serving society, businesses earn goodwill and customer loyalty, which ensures long-term survival. Example: Companies adopting eco-friendly packaging gain consumer trust.
Improved Public Image: Socially responsible firms enjoy a better reputation. Example: Tata Group is admired for philanthropy.
Government Support: When businesses contribute to social causes, the government is less likely to impose strict regulations.
Employee Satisfaction: Workers prefer to be associated with socially responsible companies, leading to better morale and productivity.
Sustainability: Taking care of the environment and community ensures resources are available for future operations.
Ethical Obligation: Since businesses use society’s resources, they are morally bound to give back.
7. How does the economic environment affect business performance? Provide examples.
Answer:
The economic environment consists of factors like income levels, inflation, interest rates, taxation, and overall economic growth. These directly influence business performance.
Effects:
Consumer Demand: Rising income increases demand for goods; falling income reduces sales. Example: During COVID-19 slowdown, demand for luxury cars dropped.
Cost of Operations: High inflation increases costs of raw materials, reducing profit margins.
Investment Climate: Lower interest rates encourage borrowing and expansion. Example: Startups in India benefited from low interest loans under government schemes.
Employment Levels: High employment boosts purchasing power, while unemployment reduces market size.
Government Policies: Tax incentives encourage business growth, whereas high taxation discourages investment.
8. Explain the relationship between business and society with reference to social responsibility. [GU BCom: 2022]
Answer:
Business and society are interdependent—business draws resources from society and provides goods, services, and employment in return.
Relationship with Social Responsibility:
Mutual Dependence: Businesses need customers, employees, and raw materials from society, while society depends on businesses for jobs and goods.
Responsibility to Stakeholders: Businesses must balance the interests of shareholders, employees, customers, and communities.
Social Development: By supporting education, healthcare, and environment, businesses improve living standards. Example: Infosys Foundation works on rural development.
Trust and Goodwill: Ethical and responsible practices build strong business-society relations.
Sustainable Growth: Businesses must ensure their actions do not harm future generations.
Thus, businesses and society share a symbiotic relationship, where social responsibility ensures harmony.
9. What are the challenges businesses face in adhering to ethical practices?
Answer: While ethical practices are desirable, businesses often face challenges in implementing them.
Challenges:
Profit vs. Ethics Conflict: Sometimes, ethical practices increase costs and reduce profits. Example: Using pollution-control technology raises production cost.
Lack of Awareness: Small firms may not fully understand ethical standards and compliance requirements.
Global Competition: Pressure to reduce prices may push firms to adopt unfair practices like child labor or low wages.
Corruption and Unethical Culture: In some industries, bribery and favoritism are widespread, making it hard to remain ethical.
Weak Legal Framework: In developing countries, enforcement of ethical standards is often weak.
Short-term Orientation: Managers often focus on immediate profits rather than long-term ethical benefits.
Hence, businesses struggle between profit motives and ethical responsibilities.
10. Discuss the impact of cultural factors in the international business environment on multinational corporations.
Answer: Cultural factors refer to the values, beliefs, customs, language, and lifestyles of people in different countries. These have a major impact on multinational corporations (MNCs).
Impacts:
Product Adaptation: MNCs must customize products to suit cultural preferences. Example: McDonald’s offers vegetarian options in India.
Communication Barriers: Language differences may lead to misunderstandings in global teams.
Marketing Strategies: Advertising must respect local traditions. Example: Coca-Cola uses culturally relevant festivals in its campaigns.
Management Practices: Leadership styles, decision-making, and employee relations vary across cultures. Example: Japanese firms follow group decision-making, unlike Western individualism.
Consumer Behavior: Cultural values shape buying patterns. Example: In Middle Eastern countries, modest fashion brands perform better.
Negotiation Styles: Business negotiations differ across countries; some prefer formal contracts, others rely on trust and relationships.
Thus, cultural factors play a decisive role in how MNCs operate and succeed globally.
b) Short Notes for 5 Marks
Micro Business Environment
The micro business environment refers to the immediate internal and external forces that directly affect the operations of a business. It includes customers, competitors, suppliers, employees, shareholders, and media. These factors have a direct influence on production, pricing, and sales. For example, consumer demand determines what products a company produces, while suppliers affect the cost and quality of inputs. Thus, the micro environment plays a vital role in shaping day-to-day decisions of a business.
Meso Business Environment [GU BCom: 2024]
The meso business environment is the industry-level environment that acts as a link between the micro and macro environments. It includes trade associations, industry competitors, suppliers, distributors, and regulatory bodies that affect businesses operating in a particular sector. For example, in the banking industry, guidelines from RBI or competition among banks form part of the meso environment. It shapes industry practices, competition, and efficiency, influencing how firms operate within their sector.
Macro Business Environment
The macro business environment refers to the broader external forces that indirectly influence business activities. It includes political and legal systems, economic conditions, socio-cultural factors, technology, natural resources, and globalization. These factors are uncontrollable by the business but have long-term impacts. For instance, government tax policies, inflation, and new technologies significantly affect business strategies. Businesses must adapt to these forces for survival and growth.
International Business Environment
The international business environment consists of external forces across different countries that influence global business operations. It includes international trade laws, foreign policies, economic conditions, cultural diversity, and global competition. For example, multinational companies like Apple or Samsung must adapt their strategies to different consumer preferences and regulations in various countries. It plays a key role in shaping strategies for expansion, investment, and competitiveness in global markets.
Business Ethics
Business ethics refers to the moral principles and values that guide the behaviour of individuals and organizations in business activities. It ensures honesty, fairness, and responsibility in dealings with stakeholders. Ethical business practices help in building trust, enhancing reputation, avoiding legal issues, and ensuring long-term success. For example, fair wages, transparent advertising, and environmental protection reflect ethical behaviour in business.
Social Responsibility of Business [GU BCom: 2022]
Social responsibility refers to the obligation of business to contribute positively to society while pursuing profits. It involves protecting the environment, ensuring employee welfare, producing safe products, and engaging in community development. By fulfilling social responsibility, businesses build goodwill, maintain sustainability, and strengthen relationships with stakeholders. For example, Tata Group engages in education, healthcare, and environmental initiatives, reflecting corporate social responsibility.
Economic Environment [GU BCom: 2013]
The economic environment includes all economic factors such as income levels, inflation, interest rates, employment, taxation, savings, investment, and overall economic growth that affect business performance. A favourable economic environment encourages business expansion, while unfavourable conditions create challenges. For example, high inflation increases production costs, while economic growth boosts consumer demand. Hence, business decisions depend greatly on the prevailing economic environment.
Ethical Issues in Business
Businesses today face several ethical issues such as unfair trade practices, false advertising, exploitation of workers, corruption, environmental pollution, and misuse of consumer data. These issues arise due to the conflict between profit-making and ethical conduct. For instance, misleading claims in advertisements or underpayment of labour are common ethical challenges. Addressing these issues is essential for maintaining trust and reputation.
Stakeholders in Business Environment
Stakeholders are individuals or groups who are directly or indirectly affected by business activities. They include customers, employees, shareholders, suppliers, creditors, government, and society at large. For example, customers expect quality products, employees seek fair wages, and shareholders expect returns on investment. Businesses must balance the interests of all stakeholders to ensure long-term success and sustainability.
Cultural Influences in Business Environment
Cultural factors such as language, religion, traditions, values, education, and lifestyle significantly influence business activities. They affect consumer behaviour, marketing strategies, product design, and workplace practices. For example, McDonald’s adapts its menu in India by offering vegetarian options due to cultural and religious preferences. Understanding cultural influences helps businesses operate successfully in domestic as well as international markets.
Section 4: Questions for 10 Marks
1. Discuss in detail the difference between micro, meso, and macro environment in business. [GU BCom: 2023]
2. What is business? What steps have to be taken in social responsibility of business in developing an organization? [GU BCom: 2022]
Meaning of Business: Business refers to an economic activity concerned with the production and distribution of goods and services with the main objective of earning profit. It involves continuous processes like investment, production, marketing, and sales.
Steps to be taken in Social Responsibility for Developing an Organization:
For long-term growth and goodwill, businesses must integrate social responsibility into their operations. The following steps are essential:
i) Protecting the Environment – Business should adopt eco-friendly production processes to reduce pollution and preserve natural resources.
ii) Employee Welfare – Fair wages, healthy working conditions, training, and growth opportunities must be provided to employees.
iii) Consumer Protection – Supplying safe, reliable, and quality products at reasonable prices strengthens consumer trust.
iv) Community Development – Businesses should engage in social welfare activities like education, healthcare, and infrastructure development.
v) Ethical Practices – Transparency, honesty in dealings, and avoidance of unfair trade practices help in creating a positive image.
vi) Compliance with Laws – Businesses must follow all legal and regulatory norms to maintain smooth operations.
Hence, business is not only a profit-making activity but also a social institution that should serve the interests of various stakeholders while contributing to the overall development of the organization and society.
3. Explain the various social responsibilities of a business towards different interest groups. [GU BCom: 2024]
Social responsibility refers to the obligation of business to protect and promote the interests of society along with earning profits. Businesses have to fulfil responsibilities towards different interest groups as follows:
i) Responsibility towards Shareholders/Owners – To ensure fair returns on investment, safeguard capital, and maintain transparency in operations.
ii) Responsibility towards Employees – To provide fair wages, job security, training, safe working conditions, and opportunities for growth.
iii) Responsibility towards Consumers – To supply quality products at fair prices, avoid adulteration, ensure safety, and provide after-sales services.
iv) Responsibility towards Government – To pay taxes honestly, follow laws and regulations, and assist in economic development.
v) Responsibility towards Suppliers and Creditors – To maintain fair dealings, timely payments, and long-term relationships.
vi) Responsibility towards Society at Large – To protect the environment, generate employment, participate in social welfare projects, and avoid harmful practices.
In conclusion, fulfilling responsibilities towards different groups helps in building goodwill, reducing conflicts, and achieving sustainable growth of the business.
4. Elaborate on the four pillars of corporate social responsibility (Economic, Legal, Ethical, and Philanthropic obligations). [GU BCom: 2023]
Corporate Social Responsibility (CSR) refers to the responsibility of business organizations to contribute to the welfare of society along with profit-making. Carroll’s model of CSR highlights four pillars:
i) Economic Responsibility – The primary duty of business is to be profitable and efficient. Profit-making ensures survival, growth, and ability to contribute to society. For example, companies like Reliance and TCS generate wealth that benefits shareholders and the economy.
ii) Legal Responsibility – Businesses must operate within the framework of laws and regulations set by the government. This includes paying taxes, complying with labour laws, consumer protection laws, and environmental regulations.
iii) Ethical Responsibility – Beyond legal requirements, businesses must follow moral principles such as fairness, honesty, transparency, and avoidance of unfair practices. For example, treating employees fairly and not misleading consumers in advertisements.
iv) Philanthropic Responsibility – Businesses are expected to voluntarily contribute to society through charity, community service, and development initiatives. For example, Tata Group invests in education, health, and rural development projects.
Thus, the four pillars of CSR emphasize that a business must balance profitability with social welfare, ensuring sustainable development and long-term goodwill.
5. Discuss the meaning and layers of the business environment. How do these layers impact business decision-making?
Meaning: The business environment refers to all external and internal factors that influence the functioning of a business. It includes forces such as customers, competitors, suppliers, economic conditions, government policies, technology, and social values.
Layers of Business Environment:
i) Micro Environment – Immediate factors such as customers, suppliers, competitors, shareholders, and employees that directly affect business operations.
ii) Meso Environment – Industry-level factors like trade associations, regulatory bodies, distributors, and competition within the sector.
iii) Macro Environment – Broad external forces like political, economic, social, technological, legal, and environmental conditions (PESTLE) that impact all businesses.
iv) International Environment – Global factors such as international trade laws, cultural diversity, foreign policies, and global economic trends.
Impact on Decision-Making:
Micro environment influences pricing, customer service, and product development decisions.
Meso environment affects competitive strategies and industry practices.
Macro environment shapes long-term investment, expansion, and compliance decisions.
International environment influences global strategies, localization, and cross-border alliances.
Thus, analyzing all layers of the environment helps managers make effective and sustainable business decisions.
6. What is business ethics? Discuss its significance and challenges in the context of modern business organizations.
Meaning: Business ethics refers to the moral principles and values that guide the conduct of business activities, ensuring fairness, honesty, and responsibility in dealings with stakeholders.
Significance:
i) Builds trust and goodwill among customers, employees, and investors.
ii) Enhances brand reputation and competitive advantage.
iii) Reduces legal risks and ensures compliance with laws.
iv) Promotes long-term sustainability through fair and responsible practices.
Challenges:
i) Conflict between profit maximization and ethical conduct, as unethical shortcuts may appear more profitable.
ii) Globalization creates diverse cultural and legal standards, making uniform ethical practices difficult.
iii) Competitive pressures often tempt firms towards unfair practices like false advertising or exploitation of workers.
iv) Weak regulatory systems and lack of awareness in developing countries increase ethical challenges.
Therefore, while business ethics is crucial for sustainable success, organizations must overcome these challenges through strong values, training, and transparent policies.
7. Explain the role of the international business environment in shaping the strategies of multinational corporations, with examples.
The international business environment consists of external global forces like trade policies, foreign relations, cultural differences, and global economic trends that influence multinational corporations (MNCs).
Role in Strategy Formation:
i) Product Strategy – MNCs adapt products to suit cultural preferences. For example, McDonald’s offers vegetarian menus in India due to cultural and religious beliefs.
ii) Marketing Strategy – Different countries require customized advertising. Coca-Cola changes its promotional themes according to local culture.
iii) Investment Strategy – International taxation, trade agreements, and economic policies influence where MNCs invest.
iv) Human Resource Strategy – Recruitment, training, and work culture must adapt to local practices.
v) Competitive Strategy – Global competition encourages innovation, cost efficiency, and partnerships.
Thus, the international business environment forces MNCs to localize their strategies while maintaining global efficiency.
8. Discuss the interplay between micro, meso, macro, and international business environments in influencing business operations.
Business operations are shaped by multiple layers of the environment that interact with one another.
i) Micro Environment – Customers, suppliers, competitors, and employees directly affect the day-to-day functioning of a business.
ii) Meso Environment – Industry-level associations, distributors, and regulatory bodies set standards that influence competition and industry practices.
iii) Macro Environment – Political, economic, socio-cultural, technological, and legal conditions create opportunities and threats for all businesses.
iv) International Environment – Globalization brings in trade policies, foreign investments, and cultural factors that influence multinational operations.
Interplay:
Micro factors like customer demand are influenced by macro factors such as economic conditions.
Meso factors like trade regulations are shaped by international agreements.
Macro technological changes affect both micro-level production and industry-level practices.
Hence, business decisions cannot be taken in isolation; managers must analyze how these layers interact to design effective strategies.
9. How does social responsibility enhance the long-term sustainability of a business? Provide examples from Indian businesses.
Social responsibility means that a business should balance profit-making with contributing to the welfare of society. It ensures long-term sustainability in the following ways:
i) Goodwill and Reputation – Socially responsible firms gain trust and customer loyalty. Example: Tata Group is respected for its contributions in education and healthcare.
ii) Employee Motivation – Fair treatment, welfare programs, and ethical practices improve employee satisfaction and productivity. Example: Infosys invests in employee welfare and training.
iii) Environmental Protection – Eco-friendly practices ensure sustainable use of resources. Example: ITC follows sustainable forestry and green initiatives.
iv) Reduced Government Interference – Responsible businesses face fewer legal restrictions and enjoy government support.
v) Sustainable Growth – By aligning business goals with societal needs, companies ensure long-term stability and profitability.
Thus, social responsibility strengthens the relationship between business and society, ensuring survival and success in the long run.
10. Analyze the impact of ethical practices on business success. Discuss the consequences of unethical behavior with relevant examples.
Impact of Ethical Practices on Success:
i) Enhances brand image and attracts loyal customers.
ii) Builds trust with stakeholders such as investors, employees, and suppliers.
iii) Reduces legal risks and financial penalties by ensuring compliance.
iv) Improves employee morale, leading to higher productivity.
v) Provides a competitive advantage by differentiating the business.
Consequences of Unethical Behavior:
i) Loss of Reputation – Scandals damage credibility. Example: Volkswagen faced criticism after the emission scandal.
ii) Legal Penalties – Engaging in corruption or fraud leads to fines and restrictions.
iii) Consumer Distrust – False advertising or poor-quality products result in loss of customers.
iv) Employee Dissatisfaction – Unfair treatment reduces motivation and increases turnover.
v) Financial Losses – Boycotts, legal costs, and decline in sales affect long-term profitability.
Thus, ethical practices act as a foundation for sustainable success, whereas unethical behaviour may provide short-term gains but results in long-term harm.
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