A Short Formal Report Looking Into Setting Up A Chemical Plant Essay Example
A Short Formal Report Looking Into Setting Up A Chemical Plant Essay Example

A Short Formal Report Looking Into Setting Up A Chemical Plant Essay Example

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  • Pages: 4 (940 words)
  • Published: December 7, 2017
  • Type: Case Study
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The objective of my task is to create an official and brief report that communicates details about the social benefits, social costs, private benefits, and private costs associated with constructing a chemical plant in the outskirts of a small town featuring a marketplace. The goal is to determine if proceeding with this project would be advantageous for the company.

On January 28th, 2003, Ian Spencer will receive a report. This report will utilize business theory to compare social and private costs and benefits as well as apply these concepts to stakeholders. The objective of the report is to evaluate the potential consequences of a famous chemical manufacturing company building a new chemical plant on the outskirts of a small market town. The suburbs have experienced recent growth with new housing developments while the area is recognized for its scenic countryside.

Examining the social and private costs and benef


its is crucial before commencing construction. Private costs pertain to expenses incurred by internal stakeholders, owners, and employees of the firm during factory establishment. The company has several private costs to bear if it decides to proceed with this project. These include purchasing land for the factory's construction and covering expenses related to labor, building materials, and other construction-related expenditures.

The company will be responsible for paying for all capital including manufacturing equipment, buildings, and labor costs such as scientists. Raw materials used for chemical production, land, transportation of finished goods including petrol and extra vehicles will also be incurred costs. Additionally, there may be intangible costs such as damage to the company's reputation if local residents object to the new plant.

Though the pollution-causing plant may lead to decreased sales as

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people avoid buying products due to environmental degradation, it may not majorly affect the company if most sales occur in other regions. However, on the positive side, setting up the factory will also bring in many private benefits, such as increased profits and sales for the chemical firm.

The company could gain multiple advantages if they choose to move their production plant to a new location. Firstly, they could acquire cheap yet high-quality land. Secondly, recruiting employees would become less challenging as job seekers might move into the newly developed housing estate. Thirdly, transportation costs to their clients would decrease if they move closer to them compared to their existing plants. Moreover, the company's reputation could be strengthened by providing stable employment opportunities or sponsoring local events. Lastly, if the company decides to construct on a brownfield site, which is considered an eyesore and an environmental hazard, its reputation would be further elevated.

The company could improve the area's aesthetics through tree planting, as well as disinfecting it. The establishment of a new chemical plant incurs social costs that will affect six stakeholder groups, including the owners, employees, financiers, suppliers, customers, and local community. Internal stakeholders consist of the owners and employees, while external stakeholders include the other four groups outside the company.

The external stakeholders, including employees and community members living near the new chemical plant, will bear the brunt of its social costs. The risks associated with financing the construction may lead to additional expenses for financiers. Suppliers may also encounter costs related to transportation, necessitating the purchase of more vehicles. Customers can expect higher prices for chemicals as a means of funding the

plant. All in all, these social costs are expected to have a significant impact on the local community.

Living in close proximity to a substantial chemical plant can pose difficulties for nearby inhabitants, primarily concerning unattractive aesthetics. Fortunately, the company has the capacity to address this issue by building an aesthetically pleasing structure or planting trees around the facility. Furthermore, residents may encounter noise pollution from traffic and light pollution caused by cracking tower fires. Additionally, unpleasant odors emanating from the plant are also a potential concern. During peak hours of rush hour traffic, heavy lorry vehicles may further deteriorate road conditions in the surrounding area.

The establishment of a large, polluting chemical plant may result in a decrease in local house prices as potential buyers may be deterred. In addition, there may be social benefits for other stakeholders, such as the employed workers who not only receive payment but also potentially attain job satisfaction.

The raw material suppliers of the company receive payment for their goods, while the chemical plant generates income for them. The customers of the company are able to purchase goods of superior quality at a lower price. The financiers receive their invested funds back with additional interest. Also, the local community is advantaged as there are more job opportunities available to them.

The plant may create a lot of traffic, and therefore, a better road system would be beneficial. This would result in improved local roads and benefits for the local government through taxes. In conclusion, I have evaluated the social and private costs and benefits of establishing a chemical plant in this area and assessed how it will impact stakeholders,

particularly the local community. Based on this analysis, I recommend that the chemical company should not proceed with building the plant in this area due to the social and private costs outweighing the benefits.

While the building and equipment expenses are private costs that must be paid regardless of location, my stance remains unchanged. The pollution, traffic, and decline in property values strongly impact the local community. While job creation is a positive outcome, it would not be substantial, and working conditions may not be favorable. My suggestion is to build in a less populated area while still remaining an ideal location for suppliers and customers.

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