Sounders Management Company owns and provides management services for several shopping centers. After 5 years with the company, James Heller was recently promoted to the position of manager of Brunswick, an 18-store mall on the outskirts of a downtown area. When he accepted the assignment, James was told that he would hold the position for only a couple of years because Brunswick would likely be torn down to make way for a new sports stadium. James was also told that if he did well in his assignment, he could be in line for heading one of the company's new 200-store operations that were currently in the planning store. While reviewing Brunswick's financial records for the past few years, James observed that last year's oil consumption was up by 8%, even though the number of heating degree days was down by 4%. Somewhat curious, James uncovered the following information: • Brunswick is heated by forced air oil heat. The furnace is 5 years old and has been well maintained • Fuel oii is kept in four 5,000-gallon underground oil-tanks. The oil tanks were installed 25 years ago. • Replacing the tanks should cost $80,000. if pollution was found, cleanup costs could go as high as $2,000,000, depend on how much oil had leaked into the ground and how far it had spread Brunswick • Replacing the tanks should add more congestion to Brunswick 's parking situation Required: What should James do? explain
Sounders Management Company owns and provides management services for several shopping centers. After 5 years with the company, James Heller was recently promoted to the position of manager of Brunswick, an 18-store mall on the outskirts of a downtown area. When he accepted the assignment, James was told that he would hold the position for only a couple of years because Brunswick would likely be torn down to make way for a new sports stadium. James was also told that if he did well in his assignment, he could be in line for heading one of the company's new 200-store operations that were currently in the planning store. While reviewing Brunswick's financial records for the past few years, James observed that last year's oil consumption was up by 8%, even though the number of heating degree days was down by 4%. Somewhat curious, James uncovered the following information: • Brunswick is heated by forced air oil heat. The furnace is 5 years old and has been well maintained • Fuel oii is kept in four 5,000-gallon underground oil-tanks. The oil tanks were installed 25 years ago. • Replacing the tanks should cost $80,000. if pollution was found, cleanup costs could go as high as $2,000,000, depend on how much oil had leaked into the ground and how far it had spread Brunswick • Replacing the tanks should add more congestion to Brunswick 's parking situation Required: What should James do? explain
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Sounders Management Company owns and provides management services for several shopping centers. After 5 years
with the company, James Heller was recently promoted to the position of manager of Brunswick, an 18-store mall on the
outskirts of a downtown area. When he accepted the assignment, James was told that he would hold the position for
only a couple of years because Brunswick would likely be torn down to make way for a new sports stadium. James was
also told that if he did well in his assignment, he could be in line for heading one of the company's new 200-store
operations that were currently in the planning store. While reviewing Brunswick's financial records for the past few
years, James observed that last year's oil consumption was up by 8%, even though the number of heating degree days
was down by 4%. Somewhat curious, James uncovered the following information:
• Brunswick is heated by forced air oil heat. The furnace is 5 years old and has been well maintained
• Fuel oii is kept in four 5,000-gallon underground oil-tanks. The oil tanks were installed 25 years ago.
• Replacing the tanks should cost $80,000. if pollution was found, cleanup costs could go as high as $2,000,000,
depend on how much oil had leaked into the ground and how far it had spread Brunswick
• Replacing the tanks should add more congestion to Brunswick 's parking situation
Required:
What should James do? explain
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