5.+Regulating+and+controlling+business+activity

**5.1 Reasons for regulations**
5.1.1 Impact of business decisions on people, the economy and the environment Explain why intervention in business activity is required so that social and economic objectives of the state can be better achieved • Give examples of intervention both to support and control the impact of business activity on people, the economy and the environment • Use the examples to show how outcomes differ [following intervention] and are more in line with the objectives of the state e.g. to create employment, minimise resource depletion Show an awareness of how business decisions have an impact on others (society, environment and people) • Use examples to show how business decisions create externalities

** Social and environmental costs and benefits of business **
Scenario Diddley Dyers plc is a dyeing company that dyes fabrics for different clothing producers in Country X. It has been in business for 10 years and exports 25% of its output. It has one large factory near to a city and next to a major river. The process making dyes results in a lot of poisonous waste being produced. The waste is put into the river. The river is now very polluted as several other factories also discharge their waste into the river and all the fish have died. Local people who used to go fishing in the river have to now either buy their fish from the local market or travel many miles to another river that is not polluted. The local people are also concerned that children play in the river and they might become ill due to the pollution. The local people formed a pressure group to try to make the government do something about the pollution. The government has finally proposed a new law to deal with the problem. The law would forbid businesses to put any waste into the river. If businesses are caught doing this they will be fined a large amount of money. If the new law is introduced at the end of the year it will have a great effect on the business, because at present Diddley Dyers plc discharge all of their waste into the river. If the new law is introduced they will not be allowed to discharge any waste into the river unless the harmful waste has been removed. Some foreign competitors have no laws that require them to clean up their waste products.

The company directors are worried that they will not be able to afford to clean up their waste products. Diddley Dyers plc have two options as follows: • buy new equipment which will reduce the polluting waste – this will increase costs by 50% which will result in a large increase in prices • relocate the factory to another country where the laws regarding pollution are less severe. Task • Read the scenario above. • Produce your own arguments as to whether the government should introduce a law to ban the discharge of waste into local rivers. • Present your arguments to the other two groups.
 * Group 1: instructions**
 * You represent the company directors of Diddley Dyers plc.**

There has been a large increase in the import of dyes from businesses that are located abroad. If the new law on reducing pollution is introduced, it is possible that there will be an even bigger increase in imports and local businesses may find it difficult to survive. Task • Read the scenario above. • Produce your own arguments as to whether the government should introduce a law to ban the discharge of waste into local rivers. • Present your arguments to the other two groups. • When each group has presented its argument, your group should make the final decision as to whether the new law should be passed. Explain why you have made your decision.
 * Group 2: instructions**
 * You represent the government of the country where the Diddley Dyers factory is located.**

Many of the local community work for Diddley Dyers plc and may be affected by the proposed law. Diddley Dyers plc is the main employer for this area and the main source of business for the surrounding enterprises. The local water supply authority has revealed that Diddley Dyers plc is responsible for the slight discoloration and unpleasant taste of the local water supply. Task • Read the scenario above. • Produce your own arguments as to whether the government should introduce a law to ban the discharge of waste into local rivers. • Present your arguments to the other two groups.
 * Group 3: instructions**
 * You represent the local community in the area where the Diddley Dyers factory is located.**