International Management Control Systems : Social and Environmental Management Control Systems

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Question 1: Identify the five tier costs and benefits related to absetos removal. The company CEO has decided to remove asbsetos from its 1 000 000 000 square feet headquarters, so we are going to identify and analyse five tier cost and benefit from this removal. At the first Tier, we have the Conventional cost, which are directly associated with the capital expenditure. So we have cost of an expertise before the removing asbestos. This cost is incurred by appraisal activities. After we have, obviously the cost of to remove all asbestos in the headquarters. This cost is incurred by prevention. And we can also add cots of auditors who check if the company really did what they claim, it’s a cost incurred by appraisal activity. At a second tier, we have hidden costs, so we find here the cost for finding our suppliers. Indeed, we spend money and time to search our suppliers. But in this case, we have also benefit because if we don’t regularise the company, we could have pay a fine to the government because we have asbsetos in our company. So these costs are incurred by prevention. At a third Tier, we have contingent costs, because we don’t predict the future, so if our suppliers don’t achieve to remove all the asbestos, we will pay penalties. At the contrary, if we did it well, we may win a award from a governmental agency. These costs are incurred by appraisal activities. At a fourth tier, we have relationship and image, if we don’t think to the welfare of our employees maybe, some employees will leave our firm and it will engender costs of dismissals but also costs of recruitments to replace the employees who left the company. In the other hand, benefits from relationship and image, is maybe that with this commitment to the environment, we may attract highky skilled employees especially for the young people. At the fifth tier, we have Societal costs. The

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