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Summary AC504 assignment.docx In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to incorporate a new technology, which used recycling techniques for wastewater. The new idea would protect the environment, sell the reclaimed wa$4.99
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Summary AC504 assignment.docx In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to incorporate a new technology, which used recycling techniques for wastewater. The new idea would protect the environment, sell the reclaimed wa
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Purdue University
AC504 In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to incorporate a new technology, which used recycling techniques for wastewater. The new idea would protect the environment, sell the reclaimed wastewater, and it would be cost effective in the long term. ...
a proposal was brought up to the ceo and board of directors to incorporate a new technology
which used recycling techniques for wastewater the new idea
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In the Kardell Paper Co., a proposal was brought up to the CEO and board of
directors to incorporate a new technology, which used recycling techniques for
wastewater. The new idea would protect the environment, sell the reclaimed
wastewater, and it would be cost effective in the long term. The downsides to consider
would be it would cost about $70 million to incorporate this new technology, the plant
would have to operate at a reduced capacity level short term and even be closed down
short term to make all of the necessary changes. Using the modified 5-question
approach and cost benefit analysis table, this will help with the recommendation to the
board of directors on whether they should accept or deny this installation of new
technology. The board of directors did make the decision to refuse the new technology
but going through the 5-question approach will determine the ethicality of that decision.
Background
The Kardell paper mill has several facilities in different locations with the original
and largest being established on the Cherokee River in southeastern Ontario. This
location is still the company’s largest profit center. The company is publicly traded and
shares are widely held. The firm has a record of reporting good profits and paying
generous bonuses to senior levels. The facility employs 500 people out of a community
of 22,000 along the Riverside. At the time the facility was built, it was not designed
around protecting the environment and the wastewater is discharged into the Cherokee
River. There is a screening to remove only the level of contaminants into the river that
are required by the provincial regulations. There are other industrial plants along the
river next to the Kardell plant. One of the managers at the Kardell plant was sensitive to
environmental issues and hired a summer student to conduct tests on the River for its
COBHAM PRIVATE
, water quality. The tests concluded with showing high readings of an industrial chemical
called sonox. This presented a problem as these results were not included in the plants
monthly reports to management. With this information, the manager had brought it to
the CEO with a recommendation that Kardell carries out an environmental audit of its
operations, as the manager pointed out local doctors were expressing health concerns
on the rise in the community. The manager offered his solution of adopting a new
processing technology that used recycling techniques for wastewater. The technology
operates in a closed cycle that protects the environment but also reclaims the waste
material to be sold to chemical producers (Brooks & Dunn, 2017).
Profitable
To determine the answer to is it profitable, I use a cost benefit analysis table to show
the benefits and costs, which then provides the benefit cost ratio. We have the cost of
the new technology at 70 million, annual revenues of 750 million, profit margin around
12%, and approximate cost of litigation 1.8 billion. Other costs include 5 million in
onboarding after shut down, operating at 55% capacity for one year and shut down the
second year, and a three-year tax on profits at 5%. Using the information I then filled out
a cost benefit analysis table, which shows when the probability that the litigation will
occur is greater than 63%, the benefits outweigh the costs.
25% 50% 75%
Benefit/Savings 100% likely likely likely
360
Present Value (at 20%) of Possible Litigation Mil 90 180 270
Cost to Implement New Technology
Decrease in Profit during Year 1 49.5 49.5 49.5 49.5
Decrease in Profit during Year 2 90 90 90 90
COBHAM PRIVATE
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