Board Recommendation and Cost/Benefit Analysis
Read the ethics case, The Kardell Paper Co., on pages 237-239 of your text.
Using the modified 5-question approach, analyze the ethicality of thedecision to (or not to) incorporate the new technology and make a fullysupported recommendation to the Board of Directors. Supplement thisanalysis with a Cost-Benefit Analysis (CBA) table.
You will need to reference your CBA in your recommendation to theboard. Make sure you thoroughly detail your recommendation withreflections on the consequences of the decision, whether the decision isfair to all, and whether the decision demonstrates the virtues expectedof the Board of Directors, taking relevant codes of conduct intoconsideration, and the company as a whole in terms of socialresponsibility.
The following information and assumptions should be used to complete the Cost-Benefit Analysis:
- Annual revenues from the mill average 750 million.
- Profit margin from the mill is approximately 12%.
- Implementing the new technology would take 2 full years. The firstyear, the company would operate at 55% capacity (assume the companycould maintain the 12% profit margin during reduced operations). Duringthe second year, it would need to be completely shut down. After the 2year period, the mill could reopen and operate at pre-implementationlevels.
- Approximate cost of litigation including medical costs for allaffected by the contamination, environmental sanctions, legal and courtcosts, victims pain and suffering, and several other items is 1.8billion. Estimate present value of future costs at 20%.
- The company would spend approximately 5 million in hiring,onboarding, and training new employees after reopening as a result ofseveral of their existing employees having to seek employment elsewhereduring the shutdown.
- As a result of the layoffs and shut down, the local economy wouldsuffer greatly. The community would be forced to implement a 3 year taxon all local business profits of 5%. The tax would be enforced for 3years beginning after the reopening of the mill. (Assumepre-implementation profit margins when calculating this and exclude allother costs and taxes when preparing this analysis.
Your recommendation should be addressed to the Board of Directors. Itshould be 4-6 pages long (including the CBA and a reference page). Yourpaper should be APA compliant.
Brooks, L. J., & Dunn, P. (2018). Business and professional ethics for directors, executives & accountants (8th ed.). Cengage Learning.
Please find the attached file for instruction including the CBA TABLE