ACCA P1 swan hill december 2008 part a

The best way to think of fairness is to think of the balance between stakeholders. ‘Right’ is more to so with moral rightness. Eg exploitation of a forest area or coral reef. Of course, we might think those actions wrong because even if they have no great effect on current human stakeholders they might affect future generations, so there can be an overlap between considering ‘fair’ and ‘right’

Here, if the firm gets monopoly this will almost certainly be favourable to shareholders and employees because monopolists find it easier to make large profits and to pay high wages. The most obvious stakeholder group to lose out will be customers because prices are likely to rise and innovation is likely ro be less. Suppliers might also lose out because the monopolist will drive a hard bargain. Note, however, that is some cases employees can also lose out if the monopolist domimates the employment market.

Less obvious, is the effect on the local community. As the monopolist is the only source of a product then its sales are likely to rise. This will increase production and deliveries so that factory pollution and delivery vehicle activity will rise. As I said, this is not a very obvious consequence of a monopoly. Of course, although bad for those living near the company it might have positive effects on those living near where competitors closed down.

In SBL always make points relevant to the scenario.

HTH