My input as an accounting manager of British Petroleum Company would be advising the board of CEO’s on the importance of spending money now. It is in the interest of any investor to be risk averse, in that they would prefer to venture into an undertaking that is less risky when making investment decisions. Besides, predicting the outcomes of action is also essential in business before spending money. So in the case of British Petroleum Company, where an oil well explodes and spilling oil in an ocean, I would propose spending of the $1 million for repair. Because of the nature of the business, they were undertaking it would not be wise to ignore such a situation. Firstly, petroleum products are naturally inflammable hence it was dangerous to leave the well unattended since it can easily catch fire and cause damages.
According to environmental, health and safety, it was unethical to watch oil leaking into the ocean because it put the lives of inhabitants into danger as well as the human beings who used this water for various purposes. Therefore, the company should have considered health issues related to this scenario and fix the problem. Failure to spend $1 million led to a subsequent loss of a large amount of money.
Delegate your assignment to our experts and they will do the rest.
Another thing I would communicate to the board of CEOs is the time value of money. According to this concept, the value of money spent now is more valuable than the same amount invested in the future. The same case would apply in this case by committing 1 million dollars would earn the company more value than forgoing or ignoring it. This amount of money was small as compared to $18.7 billion which the company was required to pay.
The opportunity cost would also apply in such a case. This concept applies when making decisions of choosing a business among several alternatives. It assesses the value of the forgone option when one investment among other business options. In this case, the company decided to forgo the cost of repairing the well which resulted in a significant loss than the actual amount. Therefore, I would warn them on the likely impacts of the decision if forgone.
The company would equally apply my approach to the time value of money and opportunity cost if it wanted to invest in a new oil company. In all business situations, it is essential to evaluate these concepts before making a final decision on the type of business one wants to finance. Also, considering ethical issues is critical in business decisions. These considerations would ensure that the business activities do not affect the environment where it operates. For example, in this case of the British Oil Company, the death of eleven people and injuries to others was due to negligence and unethical acts of the company. All these consequences would be avoided if the company decided to repair the wells earlier.
