Imagine you are a manager of a chemical company. An accident has occurred in whi

Question

Imagine you are a manager of a chemical company. An accident has occurred in which chemicals leaked into the ground water nearby, the community is unaware. Assess the costs involved in cleaning up the water immediately (confessing) versus hiding the fact and possibly paying more in the future. Discuss the impact on profitability in both situations. assess the factors involved in conducting a break-even analysis. Determine the conditions that may exist for a manager of this good or service may decide to move forward with operations even with the initial costs of operations is more than the potential revenue.

Explanation / Answer

The cost involved in cleaning up the water immediately depends upon the size of the community or the size of the groundwater reservoir. Confessing immediately may lead to an expenditure of the company which the company might not have thought of bearing. This may lead to the loss of the company as well. And if your the manager your job might also be at risk. The idea of hiding the fact and repaying it sometimes later is not proper as life cannot be exchanged with monetary amount. Here the amount repaid shall depend upon the profit earned by the company during the course of the time. The manager should not hide the fact and go for immediate retreatment of water.

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