Reference no: EM1378689
Assume you have just been named Chief Executive Officer of a small chemical refinery in the Northeast. Shortly after you suppose your new position, you discover that your three predecessors have kept a horrifying secret. Your headquarters location sits atop thirty 5,000-gallon tanks that have held a variety of chemicals from simple oil to highly toxic chemicals. Although the tanks were drained over 20 years ago, there's ample evidence that the tanks themselves have begun to rust and leach sludge from the various chemicals into the ground. Because your company is located in an area that supplies water to a large city over 100 miles away, the leaching sludge could already be causing major problems. The costs involved in a cleanup are estimated to be astronomical. Because the tanks are under the four-story headquarters building, the structure will have to be demolished before cleanup can begin. Then, all 30 tanks will have to be dug up and disposed of, and all of the soil around the area cleaned.
You're frankly appalled that the last three CEOs didn't try to correct this situation when they were in charge. If the problem had been corrected 15 years ago before the building had been erected, the costs would be substantially less than they will be now. However, as frustrated as you are, you're also committed to rectifying the situation. After lengthy discussions with your technical and financial people, you decide that a cleanup can begin in two years. Obviously, the longer you wait to begin a cleanup, the riskier it becomes to the water supply.
Before you begin the cleanup, it's imperative that you raise capital, and a stock offering seems to be the best way to do it. However, if you disclose news of the dump problem now, the offering will likely be jeopardized. But the prospect of holding a news conference and explaining your role in keeping the dump a secret keeps you up at night.
1. Who are the stakeholders in this situation?
2. Can we draw parallels between due care for the consumer and due care for the environment?
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: Assume you have just been named Chief Executive Officer of a small chemical refinery in the Northeast. Shortly after you suppose your new position,
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