Entrepreneurship

TOPIC AREA: BUSINESS GROWTH AND ETHICS

SUB-TOPIC AREA: BUSINESS GROWTH

Key unit competence:

To be able to practice business activities that are environmentally friendly.

Knowledge to be acquired

 Meaning of environment.

 Different components of the environment.

 Business activities that affect the environment.

 Strategies to reduce the negative effects of business activities on the environment.

Application to daily life

Categorise business activities that positively or negatively affect the environment.

Analyse the effect of business activities on the environment.

 Suggest measures to promote positive effects and reduce negative effects of business activities on the environment.

Promote business activities that positively contribute to the environment.

Become actively involves in activities that protect the environment.

Discourage business activities that negatively affect the environment.

Introductory Activity

The place where you work can affect the environment either positively or negatively to a very large degree. How eco-friendly you are or your employer is when it comes to using energy to heat and cool the building, to bring products into it, and to remove waste from it has a major impact on your community and the planet.

Consider this: Many buildings are built from materials that do not come from renewable sources. Office buildings have a huge appetite for electricity to power lighting,air conditioning, computers, printers, and photocopiers. Equipment may be left on 24 hours a day, seven days a week−even when no one is working. Offices consume vast amounts of paper. Even with more offices recycling paper, a large amount of paper waste still goes to landfill sites or incinerators.

In addition to paper, offices produce a lot of other waste, including equipment (especially computers), because companies regularly upgrade their equipment to stay competitive.

Electronics such as photocopiers and computers can end up in landfills, where they do not break down and, even worse, can leach harmful chemicals into the ground and water.

Rush-hour traffic jams in towns and cities are full of people trying to get to work−wasting time and polluting the atmosphere.

Questions

1 What activities are mentioned in the case study that affect the environment?

2 How can these effects in the case study be reduced?

8.1: Meaning and Components of the Environment

ACTIVITY 8.1

Based on your everyday experiences and knowledge from previous classes, answer the following questions:

1. What do you understand by the term environment?

2. List any 5 things in the environment.

3. What do you think is business environment?

4. Mention any 3 things that may be in a business environment.

Now days the word environment is often being used by almost all people around us, on television and in newspapers. Everyone is speaking about the protection and preservation of environment. The term environment has been derived from a Latin word “Environia” means to surround. It refers to both abiotic (physical or non-living) and biotic (living) environment. The word environment means surroundings, in which organisms live.

Environment is the sum total of conditions that surrounds us at a given point of time and space. It is comprised of the interacting systems of physical, biological and cultural elements which are interlinked both individually and collectively. Environment is the total sum of conditions in which an organism has to survive or maintain its life process. It influences the growth and development of living forms.Business environment is the total sum of all external and internal factors that influence a business.

Business environment is the combination of internal and external factors that influence a company’s operating situation. The business environment can include factors such as: clients and suppliers; its competitors and owners;improvements in technology; laws and government activities; market, social and economic trends.

8.2: Components of the Environment

ACTIVITY 8.2

Make research in your school library or on the internet about:

1. Atmosphere

2. Hydrosphere

3. Lithosphere

4. Biosphere

The environment is defined as the whole physical and biological system surrounding man and other organisms along with various factors influencing them. The factors are soil, air, water, light, temperature etc. These are called Abiotic factors.Besides the abiotic factors, the environment is very much influenced by biotic factorswhich include all forms of life like plants, animals, microorganisms etc.

Scientists describe the environment in terms of spheres as explained below:

a. Atmosphere (gas): The atmosphere is a mixture of nitrogen {78%), oxygen (21%), and other gases (1%) that surround the Earth. Air is the main physical component which provides oxygen for respiration. All living things including plants & animals require oxygen for their existence.

b. Hydrosphere (liquid): The hydrosphere is the liquid water component of the Earth. It includes oceans, seas, lakes, ponds, rivers and streams. The hydrosphere covers about 70% of the surface of the Earth and is the home for many plants and animals.

c. Lithosphere (solid): The lithosphere is the solid outer section of the Earth which includes Earth’s crust (the “skin” of rock on the outer layer of planet Earth), as well as the underlying cool, dense, and rigid upper part of the upper mantle.

d. Biosphere: The biosphere is made up of the parts of Earth where life exists. The biosphere extends from the deepest root systems of trees, to the dark environment of ocean trenches, to lush rain forests and high mountaintops. Soil is the most important for all living beings to create their habitat. It is the soil in which plants grow and man constructs houses to live in.

ACTIVITY 8.3

1 Make a research in your school library or on the internet about:

(a) Internal business environment.

(b) External business environment.

2 Give any 3 examples of the components of internal and external business environment.

A business establishes, grows or operates and dies in an environment. It exchanges resources in the environment. It collects inputs,that is, human resources,money, materials, machines etc. and provides output, that is, goods and services in the environment.

Environment means all surroundings. The business environment defines as a force that affect on organisational performance. It provides opportunities and threats.

Internal Environment

Internal environment is defined as all the forces or conditions that are available within an environment that affect the business operations. It comprises all controllable factors in the businesses. These factors include:

a. Employees. These are workers hired by the business. It is the major internal factor. It works inside the business. It can be controlled by the business.

c Shareholders: These are people who contribute capital to start a business. They play the major role in formation of objectives, policies, strategies of the organisation as well as their implementation.

b. Organisation structure: It is located inside the organisation. This is the arrangement of various facilities, pattern of relationships among the various departments, responsibility, authority and communication is the organisation structure.

c. Organisation culture: The sets of values that help the members to understand what an organisation stand for, how it does work, what it considers, cultural values of business forces of business and so on. It helps in direction of activities.

External Environment (PEST)

External environment is defined as all the forces and conditions that cannot be controlled by the business. The external environment is located outside the business.

It affects the organisation’s performance. It comprises all uncontrollable factors in the business. These include:

a. Political or legal environment. The rules and regulations determined by the government. Businesses must fulfil demands of the government. There should be non-violation of rules and regulation of government. Businesses should avoid unfair trade and should provide essential information to the government.

b. Economic environment. It indicates the condition of an economy in which businesses operate. It includes national income, production, inflation, savings, investment, price, government activities. Business people must have constant watch on this factor.

c. Social environment. Businesses must have a good environment in which they can be established and operate neatly.

d. Technological environment. It defines the methods available for converting resources into products or services. It transforms inputs into outputs. Inputs mean material, capital, man and machines. It helps to change the level of job, skill, product and so on. There can be innovation, development of scientific techniques which encourage mass production and distribution.

8.3: Business Activities that Positively affect the Environment

ACTIVITY 8.4

1. Identify activities done by any business in your community.

2. Describe how those activities positively affect the environment.

Business activities that positively affect the environment include:

• Reuse, reduce, recycle activities that reduce wastage and other activities that would affect the environment negatively.

• Afforestation: This involves planting trees which helps regenerate the environment.

• Proper Waste management: This is the collection, transportation and disposal of garbage, sewage and other waste products.

• Social responsibility: “Umuganda”literally translated as ‘coming together with a common purpose to achieve an outcome’.Most business are involved in communal work that protect the environment.

• Horticulture and floriculture:This involves planting of crops especially flowers which beautify the environment.

• Building of terraces in hilly or mountainous terrain to decrease both erosion and surface runoff thereby protecting the environment.

• Replacing non-decomposable materials with decomposable ones such as polyethene bags with paper bags. Paper bags can easily decompose in soil there by protecting the environment.

 

• Charcoal burning: This is done to get charcoal for sale. This business activity leads to deforestation (the cutting down of trees). The trees are burnt and in this process fumes are emitted in the atmosphere leading to air pollution.
• Construction: Businesses clear land to construct business buildings. In this process, they cut down trees and at the same time degrade the soil.
• Swamp reclamation: This is the clearing of swamps for various purposes such as settlement, farming and so on. Swamp reclamation leads to the destruction of the ecological cycle and wildlife habitants.
• Industrialisation: This activity leads to the emission of poisonous fumes into the atmosphere (air pollution).It also leads to land pollution when waste products of business activities are deposited on land. Water pollution can also occur.

 

• Agriculture: This is the growing of crops and rearing of animals. Poor methods of farming such as overgrazing and over cropping lead to soil degradation.
• Bricklaying:This is the modelling of bricks from soil and clay for sale. This activity leads to soil degradation.
• Fishing: This is the extraction of animals from water bodies for sale and consumption. Bad fishing methods lead to the fishing of young fish and extinction of certain fish species from water bodies.
• Mining:This is the extraction of minerals from the soil. Mining leads soil degradation, soil erosion and displacement of people.
• Lumbering: This the cutting of trees for commercial purposes. As trees are cut down, the soil is left bare and this can lead to soil erosion and reduced rain.

 

• Packaging: Most businesses have packaging materials for their goods such as plastic bottles, polythene bags, glass and so on. These packaging products are non biodegradable and are harmful to the soil.

8.5: Positive Effects of Business Activities on the Environment

ACTIVITY 8.6

1. Identify activities done by any business in your community.

2. Describe the positive effects of these activities on the environment.

Positive effects of business activities on the environment include:

• Saves on cutting down forests for fuel.
• Reduction on carbon emissions which depletes the ozone layer.
• Reduction on soil fertility loss and leaching of minerals.
• Reduces water loss from the soil.
• More forest cover which improves the air we breath in.
• Reduction on desertification and leads to more rain.
• Makes environment appealing and more beautiful.
• Increased vegetation cover which improves the quality of air.
• Improved drinking water quality, household sewage connection, and improved hygiene practices.
• Results into taxes which the government earns as revenue to set up social amenities such as schools, hospitals, roads and provide security to the country.
• Results into production of goods that satisfy people’s needs thereby improving the society’s well-being.
• Creation of employment opportunities for the people thereby improving their standards of living.
• Corporate social responsibility activities such as sponsoring sports activities, planting of trees, building of schools and hospitals which help the community.
• Business activities promote infrastructural development in the society such as road construction, schools, houses for people thus contributing to the development of the society.

8.6: Negative Effects of Business Activities on the Environment

ACTIVITY 8.7

1. Identify activities done by any business in your community.

2. Describe the negative effects of these activities on the environment.

Negative effects of business activities on the environment include:

• Soil degradation:This refers to the destruction of soil fertility, soil nutrients composition (organic and inorganic) resulting from overgrazing, over cultivation, deforestation, mining and quarrying and contamination from disposal of harmful waste products (industrial wasted oils and chemicals).

• Industrialisation: Although industrialisation is important for the economic growth and development of a society, it is also harmful to the environment. Amongst other things, industrial processes cause climate change, water, air and soil pollution; health issues, extinction of species, and so on.

• Deforestation: Some business use trees in their operations for production of goods and services, e.g. carpentry workshops, construction, businesses and household’s clear large tracts of forests to make farms, roads and railways.

• Heating and air conditioning systems pump greenhouse gas emissions from offices into the atmosphere and use up vast amounts of electricity.

• Waste disposal: Offices produce a lot of waste including equipment which end up in landfills, where they don’t breakdown and, even worse, can leach harmful chemicals into the growth and water.

• Depletion of resources: Businesses use a lot of natural resources in their operations. For example, manufacturing businesses deplete minerals, lumbering depletes forest resources, fishing depletes the water resources and mining and quarrying destroys and degrades land.

• Pollution:Businesses emits a lot of carbon dioxide, smoke, ozone depleting gases, dust sulphur-dioxide and so on which is dangerous for animal and plant respiration.

• Displacement of people:The establishment of businesses displaces people which affects the balancing of the ecosystem causing over population in given places and hence affecting natural environment

• Rush-hour traffic jams in towns and cities are full of people trying to get to work-wasting time and polluting the atmosphere.

• Vibration:This is the result of movement and running of heavy industrial machines. These vibrations produced greatly weaken buildings leading to collapse of such affected building.

8.7: Measures to Reduce Negative effects of Business Activities on the Natural Environment

ACTIVITY 8.8

From the negative effects of the business activities on the environment identified previously, suggest measures to reduce them.Measures to reduce negative effects of business activities on the natural environment include:

1. Following environment laws

Environmental laws and regulations are wide and varied, but essentially businesses have to make sure that they:

• Store and treat waste safely and securely.
• Protect employees and the environment from air pollution.
• Don’t produce excessive noise, smoke, fumes & other forms of pollution.
• Comply with rules for storage and use of hazardous substances and waste whilst complying with these regulations and laws inevitably imposes additional costs on many businesses. It is possible to identify some advantages that arise for the environmentally-conscious business. These include:ƒ

1. Lower raw material costs & waste disposal charges.ƒ
2. Longer life of assets which are recycled or repaired.ƒ
3. Trading opportunities with organisations that will only use environmentally friendly suppliers.
4. ƒImproved customer goodwill.

2. Awareness

• Understand the main local and global environmental issues, including climate change, pollution, water scarcity, unsustainable consumption and waste, and their relevance to an organisation.
• Identify the main environmental risks faced by an organisation and what an organisation’s strategy should be in relation to those risks.
• Identify an organisations environmental impacts through the entire value ‘hain, and how an organisation can achieve cost saving by addressing environmental impacts and market differentiation by developing environmentally sensitive products and services.
• Know when to consult experts for technical expertise on environmental management.
• Keep informed regarding and where appropriate, contribute to, the latest debate and thinking on environmental issues, and the role of business generally in relation to the environment.
• Understand the statutory and legal requirements around the environment and ensure compliance.

3. Advocacy and Advice

• Encourage concern for the environment within an organisation and with key stakeholders outside an organisation.
• Develop a compelling narrative that promotes internal understanding of an organisations environmental impacts and the role of business in the environment. Share this narrative with key external stakeholders.
• Advocate opportunities for reducing negative environmental impact and enhancing positive environmental impact.
• Encourage senior management to take a strong stand on environmental issues.
• Provide coherent, accurate, and objective advice on environmental issues and persuade others of its applicability to the business.

4. Sustainable business

A sustainable business is a business that has no negative overall impact on the environment. A business that aims to be sustainable gets involved in a range of activities designed to “minimise,. their net effect on the environment. These are activities include:

• Using packaging materials that can be reused or recycled.
• Minimising or eliminating the use of hazardous chemicals and processes that produce harmful by-products.
• Working with suppliers to assess and improve their sustainability or switching to more sustainable suppliers.
• Using more energy-efficient equipment or using renewable sources of energy.
• Collaborating with other businesses that can use waste (or supply by-products that can be used as raw materials).
• Eliminating unnecessary activities - e.g. replacing some business travel with conference calls instead.

5. Strategy and setting objectives to protect environment

• Identify opportunities for reducing negative environmental impacts and enhancing positive environmental impacts.
• Develop and pursue adoption of strategies for delivering positive environmental impacts.

   

6. Stakeholders

• Identify and build strong relationships with relevant environmental stakeholders.
• Consider the views of stakeholders, understand their main concerns, and their impact on the business and engage in constructive dialogue on environmental issues.
• Identify opportunities for collaboration with external organisations on addressing environmental impacts.

7. Communication

• Develop effective metrics to assess the impacts of environmental initiatives.
• Communicate the results of environmental initiatives internally and externally using the most appropriate and effective media.

Unit Summary

Environment is the composition of the interacting systems of physical,biological and cultural elements which are interlinked both individually and collectively.

Business environment is the total sum of all external and internal factors that influence a business.

Components of Environment

• Atmosphere(gas): The atmosphere is a mixture of nitrogen (78%), oxygen (21%), and other gases (1%) that surrounds the Earth.
• Hydrosphere (liquid): The hydrosphere is the liquid water component of the Earth. It includes the oceans, seas, lakes, ponds, rivers and streams.
• Lithosphere (solid): The lithosphere is the solid outer section of the Earth which includes Earth’s crust as well as the underlying cool,dense, and rigid upper part of the upper mantle.#Biosphere: The biosphere is made up of the parts of Earth where life exists.

Components of the Business environment

(a) Internal environment

It is defined as all the forces or conditions that are available within an environment that affect an organisation and business.

• Employees: These are people hired by the business. It works inside the business. It can be controlled by the business.
• Shareholders: These are people who contribute capital to start the business. They play the major role in formation of objectives, policies, strategies of the organisation as well as their implementation.
• Organisation structure: It is located inside the organisation. The arrangement of various facilities, pattern of relationships among the various departments, responsibility authority and communication is the organisation structure.
• Organisation culture: The sets of values that help the members to understand what an organisation stands for, how it does work, what it considers, cultural values of business forces of business and so on.

(b) External environment (PEST)

All the forces and conditions that cannot be controlled by the business is called external environment.

• Economic environment: It indicates the condition of an economy in which the business operates.
• Political or legal environment: It is defined as rules and regulations determined by the government.
• Social environment: Businesses must have good social cultural environment where a business can be established neatly. Businesses also help in employment opportunities generation.
• Technological environment: It defines about the methods available for converting resources into products or services.

Business activities that positively affect the environment

• Afforestation: This involves planting trees which regenerate the environment. Proper waste management: This is the collection, transportation and disposal of garbage, sewage and other waste products.
• “Umuganda” is literally translated as ‘coming together with a common purpose to achieve an outcome’. Most businesses are involved in communal work that protects the environment.
• Horticulture and floriculture: Involves the planting of crops especially flowers which beautify the environment.
• Building of terraces: These are applied in hilly or mountainous terrain to decrease both erosion and surface runoff thereby protecting the environment.
• Replacing non-decomposable materials with decomposable ones such as replacing polyethene bags with paper bags which protects the environment.
• Reuse, reduce, recycle activities that reduce wastage and other activities that would affect negatively the environment.

Business activities that negatively affect the environment

• Industrialisation, while it is important for economic growth and development of a society, it is also be harmful to the environment.
• Heating and air conditioning systems pump greenhouse gas emissions from offices into the atmosphere and use up vast amounts of electricity.
• Pollution, businesses emit a lot of carbon dioxide, smoke, ozone depleting gases, dust Sulphur-dioxide, etc. which is dangerous for animals and plant respiration.
• Deforestation, some businesses use trees in their operations for production of goods and services.
• Soil degradation, this refers to the destruction of soil fertility, soil nutrients composition (organic and inorganic) and the soil.
• Offices release a lot of waste which can leach harmful chemicals into the ground and water.
• Depletion of resources, businesses use a lot of natural resources in their operations.
• Displacement of people which affects the balance of the ecosystem causing over population in given places and hence affecting the natural environment.
• Rush-hour traffic jams in towns and cities leads to wasting time and pollution of the atmosphere.
• Vibration, this is a result of movement and running of heavy industrial machines. These vibrations produced greatly weaken buildings leading to collapse of such affected buildings.

Positive effects of business activities on the environment

• Increases the renewable energy share of the energy mix. Also offers a major opportunity for reducing greenhouse gas emissions as well as creating employment.
• Improved drinking water quality, household sewage connection and improved hygiene practices.
• Results into taxes which the government to set up schools, hospitals, roads and provide security to the country which benefits the society.
• Results into production of products that satisfy people’s needs especially which improves the society’s well-being.
• They lead to creation of employment opportunities for the people which improve their standards of living.
• Corporate social responsibility activities such as sponsoring sports activities, planting trees, building schools and hospitals which help the community.
• Business activities promote infrastructural development in the society such as road construction, schools, houses for people thus contributing to the development of the society.

Negative effects of business activities on the environment

• Amongst other things industrial processes can cause climate change, pollution to air, water and soil; health issues, extinction of species, and more.
• Pollutants from business activities harm public health and damages the environment.
• Untreated wastewater causes environmental problems including: pollution of ground water reservoirs, damage of transport and waste water treatment systems.
• Leakage from the fuel and energy industries can cause land contamination which affects agricultural activities.
• Hazardous materials cause damage to human health,environment and property.
• Production of non-approved pesticides damages the environment and results in the poisoning of living things and environmental pollution.
• Products that contain asbestos (friable or cement) can cause human illness such as lung disease.
• Frequent or prolonged exposure to loud noises can cause damage to a person’s physical and mental health.

Measures to reduce negative effects of business activities on the natural environment

• Following environment laws
• Sustainable business
• Awareness
• Advocacy and advice
• Compliance
• Strategy
• Stakeholders
• Communication

Unit 8 Assessment

Read the case study below and answer questions that follow.

But It’s Just a Bottle of Water

By: Lindsey May, Jessica Kotke, and Charles R. Bomar, Department of Biology, University of Wisconsin-Stout.On the way to school, Sally and her mother picked up consumables for her to use at school. Sally’s mother insisted on getting bottled water for her daughter because of her strong belief that bottled water was safer and cleaner than tap water. Back at the dormitory, however, Sally’s new roommate, Jane, argued against this with facts she had learned in class.“Did you know that while tap water is frequently tested to maintain public health and safety, bottled water has no guidelines for testing? The Rwanda Standards Board can’t regulate all the water that is bottled and sold within the country, which accounts for most of bottled water.”

Sally was taken aback by her new room-mate’s comments on the first day that they met. “Ummmm, OK, but it can’t be that bad,” she said. Sally’s mother, on the other hand, admired Jane’s enthusiasm and passion for the environment, and her knowledge of bottled water.“So, what you’re saying is that you want to pay a lot more for untested sealed water in bottles that are horrible for the environment, especially since people don’t recycle?” said Jane.“Water bottles are convenient ... anyway, I recycle ... sometimes,” said Sally.Jane was shocked to hear that her new roommate didn’t recycle often. What kind of person was she? “Do you know what happens to the unrecycled water bottles?!” she asked.Feeling momentarily brilliant, Sally said,

”They go into landfills, of course.”“Yes, landfills that are filling quickly,” snapped Jane. “We don’t have room for water bottles that could be recycled. When water bottles are thrown in trash, not only do they fill landfills, but they also increase air pollution and destroy our ozone layer. When they are burned with the regular trash, toxic fumes are emitted that are harmful to our health, and these include greenhouse gasses that are harmful to the environment.”“Okay, okay, you made your point; I’ll recycle my water bottles ALL the time,” said Sally.

“But you still won’t stop drinking bottled water! Do you know where the water comes from? A lot of companies get their water from aquifers, many of which are running low. Water bottle companies do bulk water exports, extracting groundwater at unsustainable rates. And did you know that once an aquifer is emptied or polluted, they are almost impossible to restore? Soon we will have some major water shortages.”Sally was frustrated, already arguing with her roommate, but she realised that Jane made a good point, and was impressed with her knowledge. But she still wondered why we didn’t hear about these effects if they were so horrible and what could they do about it anyway.Two weeks later Sally’s mother was in the Super market back in her hometown and reached for a case of bottled water. She hesitated and thought “should I really be buying this water if its so bad for the environment?”

Questions

1. Should Sally’s mother buy the bottled water? Support your answer.

2. How can you make society aware of the environmental problems associated with bottled water?

3. What will be the future impact on the environment if we continue to use bottled water like we do today?

4. As an entrepreneur to be, identify any three ways you can help solve the environmental problems caused by water bottles.