TideeKleen Waste Management Inc - Case Study Example

TideeKleen Waste Management Inc. Introduction TideeKleen Waste Management Inc. is a Canadian company commercializing in recycling and disposal of waste. It has a high reputation for social and environmental responsibility. It offers good remuneration to its workers including better pay, health benefits, and clearly defined pension plan, and its workers are unionized. Recently the company has started experiencing financial challenges that have led to the reduction of share prices in the market. It is faced with issues of environmental contamination and hazardous environment that has caused cancer to some of its employees. The company is considering applying various alternatives to create value for stakeholders, reduce environmental pollution and improve performance of the enterprise. This study examines various alternatives the company may apply and the impact of each decision to the stakeholders as well as recommendation for chosen alternative. The recommended strategy will aim at improving the performance of the company as well as its reputation. TideeKleen operates the old facilities by sorting and processing solid waste offers threat for hazardous components. It has installed newer facilities that less labor intensive and relies on advance technology and mainly automated to increase safety for the workers and the environment. The new automated facilities will create job opportunities for the young people and the increasing value for shareholders resources. The workers operating the older facilities are about to go for retirement and the old facilities will soon require replacement. Unfortunately, one of the old facilities is causing severe environmental contamination and has compelled the ministry of the environment to order for a thorough clean-up of the contaminated site which is likely to take very long and incur the company a lot of expenses. GSG Financial owning 25% of the TideeKleen shares has offered two suggestions for the company aimed at improving the company’s performance. Option A This option involves splitting the company into the new corporation to be named NewKleen and maintains the old facilities with different operations. The new corporation will hire new workers, own the facilities and take liability for pensions and benefits of the new facility. TideeKleen would be responsible for the old facilities and will be continue paying wages, benefits, pensions and other compensations of the old workers operating the old facilities. Furthermore, TideeKleen will be responsible for cleaning the site that was contaminated by the old facilities. After reorganizing the company, the existing shareholders will be allowed to own equivalent number of shares of the NewKleen to the ones they own in TideeKleen. NewKleen will acquire most of the efficient TideeKleen facilities, and its share value will be expected to increase to $50 per share. TideeKleen is likely to face challenges of bankruptcy because of inefficient facilities and declining market value of its shares. Option A will benefit the community since TideeKleen will be required to clean the polluted site and compensate the affected workers. In addition, the workers will continue enjoying all benefits their benefits. Consumers will continue enjoying the products and services they are used to getting from the company, and the shareholders will also retain their control of the company and continue generating income. The environmental regulatory authority will have the easy time because they can hold the TideeKleen responsible for the environmental damages (Kotler & Lee 2011). However, if TideeKleen adopts this option the existing workers may be disadvantaged in case the company is unable to meet its obligations such as paying medical benefits, pension. Shareholders will be disadvantaged because the market value of TideKleen shares will continue deteriorating because of a high cost of cleaning the site. The managers of TideeKleen will have the rough time to maintain the company competitive because of the rivalry they will face from NewKleen Company. The TideeKleen shareholders will also own shares in the NewKleen equivalent to the number of shares they currently own in the old company. Option B Under this option, TideeKleen will not restructure its operations. Instead, they will they collaborate with Freedom Coast Ventures that intends to open a firm in Liberia for disassembling and extracting valuable resources from discarded electronics. This option will be labor intensive and will require low techniques. However, it will expose employees and community members to toxic substances thus increasing the risk of cancer and neurological impairment. The proposal will be beneficial because the cost of labor will be low. The workers around the new company will earn more than double of the average market wage rate in that area. The new region has high illness and mortality rate contributed by the waterborne infectious diseases and the menace of Ebola outbreak. It was hard to control the outbreak of Ebola because of inadequate medical equipment, poor sanitation facilities and lack of clean water. Freedom Coast and TideeKleen have promised to improve the availability of clean water in the area by developing water infrastructures and well-equipped medical clinic for the community. Through improvement of infrastructure and well-equipped medical clinic the partners anticipate a reduction in deaths and illnesses in a higher rate compared to cases of deaths and illnesses resulting from poor sanitation and disease outbreak. However, this suggestion has experienced harsh resistance from the workers union that has recommended a different option (Rendtorff, 2009). Should TideeKleen decide to partner with Freedom Coast, the new employees at the new region will benefit from a creation of better-paying jobs. The shareholders will also benefit because the operation will increase the performance of the company and generate the company’s revenue. The community in Liberia will benefit from the developed medical infrastructures and clean drinking water. It will create better opportunities for suppliers and investors in the region. On the other hand, partnering with Freedom Coast will disadvantage the local community in Liberia due to environmental pollution with increased risk of cancer infection and neurological problems. In this case there is no plan for cleaning the site where TideeKleen has polluted thus the community will continue suffering (Rendtorff, 2009). Option C The suggestion proposed by workers union is to take advantage of the government subsidies and prevailing low-interest rates to finance the expansion and increase capacity of the new facilities. Though this new move will increase the cost of operations, the company workers union will intervene to ensure workers do not cause conflict until the company stabilizes. The operation will increase revenue for the business and result to strengthening of the share value in the long-run. This will enable the company to meet its obligations such as pension and environmental remediation effectively. This decision will benefit the shareholders because they will take advantage of government subsidies and low-interest rates and be able to strengthen its operations while keeping cost low. The management will have the easy time with the workers because of the support from workers union. The community will continue enjoying low products and service of the company. Furthermore, the company will take responsibility of their activities and will have to engage in cleaning the environment. The threats issued by GSG in case TideeKleen fails to adopt either option A or B are useless because GSG is not meet the threshold of 51% share ownership required to have a controlling power over the company. Since some shareholders such as Halo Ethical Funds are not contented with this option, there is probability that they may decide to sell their shares in the company thus weakening he company’s performance (Shafer-Landau, 2012). Recommendations and Conclusion The option taken by the company should benefit all stakeholders and should not increase detriments to any stakeholder. A corporate responsible company should involve all stakeholders in decision-making and ensure they take into consideration all profitable options. The stakeholders must consider right and wrong decisions. “Normative corporate responsibility suggests that corporate conduct needs to be legitimized to every human being” (Hopkins, 2012, 184). The decision-makers must examine all aspects that make an act right or wrong. Considering options A it will be morally good to improve stakeholders revenue and take responsibility of the environmental pollution. Also, it is essential because the company will take care of the needs of the workers. However, the company may fail in the long-run because of lack of efficiency. The community around will be disadvantaged because they relied on TideeKleen for various products and services and employment. Although the shareholders will be taken care of most of the stakeholders will be disadvantaged. The reason the company wants to transfer their shares to NewKleen is because they want to avoid responsibility. Therefore, it is unethical for company to engage in activities that cause environmental pollution and health hazard to the workers and it is morally wrong for the company to avoid responsibility by shifting their shares to another company (Hopkins, 2012). Considering options B the TideeKleen will strengthen its operations and increase revenue by partnering with Freedom Coast Ventures. It is morally wrong for TideeKleen to ignore the community after they have polluted the site and caused them a health hazard. By taking their operations to Liberia, the company will spread the hazard to the people in that region. Instead of going to Liberia, they should focus on strengthening their operations in their current site and prepare to compensate all workers both retired and current employees who have already suffered from the hazardous waste. This could be the right decision for the company to increase shareholders wealth. However, it is morally wrong for a company to cause more harm to the community in Liberia even though they are arguing that will reduce the current challenges the community is facing (Rendtorff, 2009). Furthermore, the reputation of TideeKleen will remain tarnished because they have not resolved the health and environmental issues the community in the current location is facing. Finally, option C offers Tideekleen with an opportunity to increase wealth for shareholders, take care of the needs of workers and increase benefits to the community. It is morally right for the company to ensure all stakeholders are taken care of. Involving all stakeholders in decision-making will help the organization avoid conflicts with stakeholders either currently or in the future. Furthermore, the company will be more acceptances from the community (Shafer-Landau, 2012). The stakeholders include Employees, business partners (such as Halo Ethical fund), the company’s management, environmental regulatory authority, community and shareholders such as GSG. Therefore, basing on deontological theory (an ethics or duty or obligation) I would recommend TideeKleen to adopt option C because it will take into consideration the needs of all stakeholders without causing any detriments to the any stakeholder. It will give the company an opportunity to increase revenue for shareholders, compensate injured workers, continue serving the community as well as continue cleaning the site. The management will also have ample time to adopt new approaches to improve the business performance while discarding approaches that failed to achieve desired goals. References Hopkins, M. (2012). Corporate Social Responsibility and International Development: Is Business the Solution? Earthscan. Kotler, P. & Lee, N. (2011) Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. John Wiley & Sons. Rendtorff, J. D. (2009). Responsibility, Ethics and Legitimacy of Corporations. Copenhagen Business School Press DK Shafer-Landau, R. (2012). Ethical Theory: An Anthology. John Wiley & Sons. Read More