BU6019 Sustainable Entrepreneurship Session 8 Social Costs and Social Benefits

Why even worry about social costs and benefits? Well, to start, what exactly are these? Consider: Private costs (e.g. financial costs of starting/running a business) Private Benefits (e.g. profits for owners) External costs (e.g. Pollution) External Benefits (e.g. new inventions – cleaner air!)

So, put it all together… Social Costs = The total cost borne by society as a result of the actions of an entrepreneur (i.e. all external and private costs!) Social Benefits = The total benefit to society as a result of the actions of an entrepreneur (i.e. all external and private benefits!)

The 3 pillars of Sustainability! Consider: Question: To what degree might a PESTLE analysis assist Entrepreneurs with Strategizing and Decision Making? ECONOMY SOCIETY ENVIRONMENT

It’s good to think… An entrepreneur opening a new factory! Social benefits include creation of jobs/workers spending locally Social costs include the loss of green land/pollution from vehicles, litter etc. Consider: Other entrepreneurs, such as suppliers, will benefit and employees spending their wages in the local economy will also be a benefit!

Is it true? Q: What are your views? - Do you agree/disagree – why? “All business activity has a ‘social cost’!” Q: What are your views? - Do you agree/disagree – why?

Business Activity Q: To what degree might future generations suffer? Remember: Entrepreneurs will be using resources such as electric, gas and water. Also, timber, oil and metal will be used in some processes! Also remember: Entrepreneurs will sometimes, through their activities, create traffic congestion (pollution), create noise and sometimes create what is perceived as a negative use of valuable land! Q: To what degree might future generations suffer?

Who likes Disney? Disneyland trains don’t use traditional fuel to transport customers around. Instead, it uses “Biodiesel” to run its trains, which is a product created from the oil it uses for cooking in its resorts’ hotels! Remember: Responsible sustainable entrepreneurs need to have a thorough knowledge of its ‘transformation process’ and the practices it undertakes. Entrepreneurs need to find ways to gather data! (e.g. customer/stakeholder feedback)

“SENSE OF PLACE” What does the term….. …. Mean to you? - Conduct some research into this!

Cost/Benefit Analysis A Cost/Benefit Analysis is a very useful business management tool! In simple terms, all potential costs are listed and all potential benefits are listed. The theory is if benefits outweigh costs, then the business project should go ahead! A real life example: A Cost/Benefit Analysis was used to help make decisions by the UK/French governments, in order to decide whether the Channel Tunnel project should go ahead!

Activity Working in pairs, discuss and list potential social costs and social benefits of the Channel Tunnel project (think about society as a whole!) Please be prepared to share your findings with everyone else.

It’s good to think! Please carefully read the article entitled “Manage it? Measure it” handed out in this session. Please bring this article back with you next week, for further discussion. Self Study: Please continue to make progress with your assignment!

And finally… Q: Is there unsustainable human development in the 21st Century? Consider: Scarcity | Climate Change | extinction of species |Pollution | Poverty | Inequality Question: What “argument” can be created here and to what degree to entrepreneurs play a part? (Social costs/benefits?)