Exxon Oil Spill Essay

As a managers it is their job to maximize the shareholders value. The main goal of any publicly owned company is to maximize shareholder wealth. At the time Exxon believe the cost of improving their tankers would be more costly versus a spill cleanup. They were wrong. They did not factor in getting caught and fined for their unethical behavior. Exxon's analysis of the costs of an oil spill versus the cost of improving their tankers seems to have been reasonable at the time it was taken. The social costs of killing birds and fish was expected to be low. In the future the estimated cost will be alot higher because of the Exxon Spill. There was such an outrage at Exxon's conduct that resulted in subsequent large fines. This was not factored in the estimation. It was the ethical responsibility of Exxon to prevent this accident by using double-hulled oil tanker. This would have prevented the negative impact on the environment. Exxon determined that the cost of cleaning up an oil spill would be less than the …show more content…
Managers need to consider the impact of their decisions on their companies' cash flows. Exxon should have given more importance to its corporate social responsibility and should have acted in a responsible and ethical manner by making desired investments in the new oil tankers. Exxon claims that it saved $22 million by not building the Exxon Valdez with a second hull. During the period of the oil spill, Exxon spent more than $2.2 billion for cleanup and for reimbursements to the federal, state, and local governments for their expenses in response to the oil spill. In addition, 31 lawsuits and 1,300 claims had been filed against Exxon within a month of the spill. On August 15, 1989, the state of Alaska also filed a suit against Exxon for mismanaging the response to the oil spill. The suit demanded both compensatory and punitive damages that would exceed $1