SCHOOL OF BUSINESS, ECONOMICS AND MANAGEMENT

BBA 140 BUSINESS ENVIRONMENT

END OF SEMESTER FINAL EXAMINATION
DATE: MONDAY 10TH DECEMBER 2018
TIME: 09:00 – 12:00 HOURS

Time allowed: 3 HOURS plus 10 minutes Reading Time.

Instructions to Candidates:

1. Read the instructions carefully.

2. Check that you have the correct examination paper in front of you.
3. Answer question ONE (1) and TWO (2) in SECTION A, and ANY OTHER
TWO (2) questions from SECTION B.
4. All questions must be answered in the answer booklet provided only.
5. Write down the number of questions that you have answered on the cover
of the examination answer booklet.
6. Begin each question on a new page.
7. Non-programmable calculators are allowed.
8. No other books, files or mechanical / electronic aids are permitted.
9. There shall be no form of communication among students during the
examination. Any students caught doing this will be disqualified.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

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SECTION A (Answer All Two (2) Questions In This Section)

QUESTION ONE

Zambian Villagers Sue Mining Giant Vedanta in UK Court

Zambian villagers claim a giant copper mine under UK-based Vedanta has polluted their
waters. They've now won the right to have their case heard in British courts.

1,800 villagers living downstream the Konkola Copper Mines (KCM) in the Zambian
Copperbelt region are demanding an end to 12 years of pollution near the town of
Chingola and KCM’s Nchanga copper mine, which has turned the adjacent Kafue into a
river of acid. The villagers are suing Vedanta, a London-based mining group, and its
subsidiary KCM in the UK for personal injury and loss of livelihood, having won a previous
High Court hearing that decided they could pursue the case in the country’s courts.

People from the four villages of Shimulala, Hippo Pool, Hellen and Kakoso are seeking
compensation for loss and damage to their land and health. They claim their primary
sources for drinking, washing, bathing and irrigating farms are surface water and shallow
wells next to the giant Nchanga copper mine. A number of scientific papers have
documented the extent of contamination of these, with acidity and heavy metal contents
regularly tens and even hundreds of times above legal limits.

One villager, Judith Kapumba, gave video testimony of how contamination has destroyed
local community’s livelihood and lives, claiming that many have “collapsed and died” as
a result of illnesses caused by drinking contaminated water, and that crops can no longer
grow, leading to starvation and poverty.

During the UK court hearing, Vedanta argued that the case against it and KCM should be
heard in Zambia. But High Court judge Sir Peter Coulson dismissed the multinational’s
claims, saying he feared that villagers wouldn’t get justice in their own country because
they wouldn’t be able to afford lawyers and adding that the Zambian legal system wouldn’t
be able to cope with such a large and long trial.

KCM is guilty of financial secrecy, historical dishonesty and attempts to pervert the course
of justice, according to Judge Coulson’s sentence, as reported by the Phulbari Solidarity

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Group, which opposes a proposed open-pit mine in Bangladesh’s Phulbari region. During
the trial, in fact, it was revealed that KCM has never filed annual accounts to the Zambian
government in accordance with the Zambian Companies Act. Meanwhile, Vedanta has
issued an announcement to the London Stock Exchange indicating that it is considering
whether to appeal the decision. The full trial is likely to take place before the end of 2017.
(Author: Mike Mwenda, 10th January, 2017)

Required

a) Using the knowledge you acquired in business environment, justify the villagers’ action
to sue Vedanta.
[5 Marks]
b) Operating an environmentally friendly business helps to reduce its impact on the
environment, preserves natural resources and improves the sustainability of the
business.
Discuss five (5) environmentally-conscious business practices Konkola Copper Mines
(KCM) should consider as mitigating factors in the case above.
[10 Marks]
c) Bearing in mind that Copper is a finite nonrenewable resource, outline any five (5)
sustainable measures that the Zambian government could put in place to ensure that
KCM’s mining activities do not cause harm to the Zambian people as well the natural
environment. [5 Marks]
d) KCM has never filed annual accounts to the Zambian government in accordance with
the Zambian Companies Act. Is this act legal or ethical?
Give a justification for your answer. [5 Marks]
e) KCM is guilty of financial secrecy, historical dishonesty and attempts to pervert the
course of justice, according to Judge Coulson’s sentence.
What advice would you give management at KCM Plc on this matter in view of its legal
structure as a Public limited company?
[5 Marks]

[30 MARKS]

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QUESTION TWO

The Rural Electrification Authority (REA) is an agency of government with the mandate
to promote the rural electrification development agenda. It was established under the
Rural Electrification Act No. 20 of 2003. Since 2006 when the Rural Electrification
Authority (REA) became operational, it has sought to accelerate the pace of
implementation of the national electrification programme for rural areas. The target set by
the Rural Electrification Master Plan (REMP) was to raise the access rate in the rural
areas to 51 per cent by 2030. Below is information extracted from the REA Strategic Plan
2014 – 2018 where a comprehensive external environmental analysis was conducted.

Required

Using a PESTEL Model re-arrange the information below for the Rural Electrification
Authority (REA) putting the factors in their rightful places.

a) Demand for electricity is high in both rural and urban areas;

b) Cooperating partners and other stakeholders are demanding for more
collaboration, transparency and accountability in the use of resources;
c) Increased government investment in the ZESCO power generation capacity.
d) The demographic distribution of the population indicates that 65 per cent of the
population is below the age of 25 years (in the reproductive age group);
e) The poverty levels particularly in rural areas have remained particularly high and
putting pressure on their capacity to afford various services such as electricity
f) The political environment in Zambia is stable with change of government through
democratic elections over the years;
g) The national energy policy was recently revised;
h) There is an optimum governance benchmark that needs strengthening and
sustenance;
i) Increased use of satellite technology in research and scoping of areas from remote
sites;
j) Developments in core technologies of renewable energies;

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k) The cost of Environmental Impact Assessment tends to be high for projects;
l) Various environmental non-governmental organisations have been established to
advocate for more compliance in the environmental sector; and
m) Displaced communities are now demanding higher levels of compensation from
the investors
n) The rate of inflation has been stable over the past five years;
o) Unemployment levels in the country are still very high;
p) The monetary policy has been stable over the last five years;
q) The HIV and AIDS is still common but the infection rate has reduced significantly;
r) Early marriages especially in rural areas suggests that this young productive
population will lead to an increase in the population in rural areas;
s) The reduced cost of ICTs; and reduced cost of solar systems.
t) A number of statutes have been established that affect rural electricity service
providers such as the following: The Rural Electrification Act of 2003; Environment
Management Act; Electricity Act; and Energy Regulation Act.
u) Stable economic policy environment over the years despite the change of
government;
v) Economic growth has been around 6 per cent of the gross domestic product over
the last five years;
[20 Marks]

[TOTAL: 50 MARKS]

Page 5 of 7
SECTION B (Answer Any Two (2) Questions)

QUESTION THREE

(a) Business is affected by different factors which collectively form the business
environment. These include economic, social, legal, technological and political
factors. Business environment is therefore, the total of all external forces, which
affect the organization and the business operations (Kotler &Armstrong 2004).

The changes in the business environment require Managers to consider three (3)
major options in attempting to manage environmental uncertainty and its potential
impact.

Discuss the three approaches managers may consider. [15 Marks]

(b) In Limited companies, shareholders have the advantage of enjoying limited liability,
however, there are times when the corporate veil is lifted.
What does the expression “lifting the corporate veil” mean and in what
circumstances does this occur. [5 Marks]
(c) Customers can be individuals or organizations that buy products or services from
business organizations. A good understanding of customers is an important factor
in the success of any business organization.
Outline any five (5) rights that customers have. [5 Marks]

[TOTAL: 25 MARKS]

QUESTION FOUR

The external environment is everything outside an organization that might affect

its operations. An organization’s external environment consists of two layers.

(a) Explain any five (5) elements that make up the micro-environment. [10 Marks]
(b) Using an industry of your choice, describe Michael Porters five forces model
and explain how it can be used to assess an industry’s profitability.
[15 Marks]

[TOTAL: 25 MARKS]

Page 6 of 7
QUESTION FIVE

(a) The Market Structure refers to the characteristics of the market either organizational
or competitive, that describes the nature of competition and the pricing policy followed
in the market. The differences in the number, type and size of firms in the market, as
well as the nature of the product itself is what affects the type of competition and
extent to which companies can control price.
In light of the above statement, discuss the distinguishing characteristics of
Monopolistic competition, Monopoly and Perfect competition market structures.
[15 Marks]
(b) Two instruments that are used to influence the performance of the economy in the
short run are monetary and fiscal policies. Monetary policy is typically implemented
by a central bank, while fiscal policy decisions are set by the national government.
Explain how Fiscal and Monetary policies impact the economy.
[10 Marks]
[TOTAL: 25 MARKS]

END OF EXAMINATION PAPER

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