Question

Case Study (25 Marks) Boom (Pty) is a local forestry company, which cuts down timber and supplies sawmills where the timber is seasoned and then cut to appropriate sizes for use in a range of industries. Boom (Pty) will work with any timber, ranging from softwoods used in construction or paper manufacture to exotic hardwoods used in expensive furniture. Its usual approach is to secure the rights from a landowner, or in some cases a national government, to cut timber. This can often involve the payment of large initial cash deposits to these suppliers, money which Boom (Pty) usually borrows. A logging team then cuts down the trees as quickly as possible and hauls the timber to a convenient river where it is floated to a sawmill. Moving on rapidly to the next site, the loggers usually leave considerable surface damage behind them. Since an increasing proportion of the company's work has been in the tropical rainforest, it has recently come under pressure from environmental groups that have protested that it is not socially responsible to act in this way. Whilst the softwood forests can be regenerated in a couple of decades by replanting, hardwoods in tropical forests take far longer to mature. The Chief Executive of the company has argued that he is not concerned about these protests since, as far as he is concerned, the company always acts ethically, as it has the agreement of the national government in any country in which the company operates. A recent development in the timber industry has been the harvesting of timber from the bottom of reservoirs which have been created by flooding valleys. Although the capital equipment required for this approach is significantly more expensive than that used in conventional logging, the operating costs are lower. Waterlogged trees in reservoirs have balloons attached, are cut, float to the surface and are towed to a sawmill. The underwater process is quieter and less disruptive to wildlife and the environment. It has been estimated that there are over half a billion trees, or 20 years' supply, submerged in reservoirs across the world, but it can take considerable research and expense to find them. As long as the timber has remained submerged deeply enough, it is of the same quality as timber harvested from the land. There is currently only one company conducting underwater logging, although a number of other companies are also considering this development. Some of the board of directors feel that Boom (Pty) should pursue this underwater approach and abandon land based logging. The Chief Executive and one other director feel that the underwater approach carries too high a risk. Required: (a) (i) Briefly explain the differences between business ethics and corporate social responsibility (CSR). (5 marks) (ii) Discuss the CSR issues relating to Boom (Pty)'s business and how the company might improve its CSR position. (8 marks) (b) With reference to Boom (Pty), evaluate the two approaches to logging and recommend which you think is most appropriate for Boom (Pty). (12 marks)

Case Study (25 Marks)
Boom (Pty) is a local forestry company, which cuts down timber and supplies sawmills where the timber is seasoned and then cut to appropriate sizes for use in a range of industries. Boom (Pty) will work with any timber, ranging from softwoods used in construction or paper manufacture to exotic hardwoods used in expensive furniture. Its usual approach is to secure the rights from a landowner, or in some cases a national government, to cut timber. This can often involve the payment of large initial cash deposits to these suppliers, money which Boom (Pty) usually borrows. A logging team then cuts down the trees as quickly as possible and hauls the timber to a convenient river where it is floated to a sawmill. Moving on rapidly to the next site, the loggers usually leave considerable surface damage behind them.
Since an increasing proportion of the company's work has been in the tropical rainforest, it has recently come under pressure from environmental groups that have protested that it is not socially responsible to act in this way. Whilst the softwood forests can be regenerated in a couple of decades by replanting, hardwoods in tropical forests take far longer to mature.
The Chief Executive of the company has argued that he is not concerned about these protests since, as far as he is concerned, the company always acts ethically, as it has the agreement of the national government in any country in which the company operates.
A recent development in the timber industry has been the harvesting of timber from the bottom of reservoirs which have been created by flooding valleys. Although the capital equipment required for this approach is significantly more expensive than that used in conventional logging, the operating costs are lower. Waterlogged trees in reservoirs have balloons attached, are cut, float to the surface and are towed to a sawmill. The underwater process is quieter and less disruptive to wildlife and the environment.
It has been estimated that there are over half a billion trees, or 20 years' supply, submerged in reservoirs across the world, but it can take considerable research and expense to find them.
As long as the timber has remained submerged deeply enough, it is of the same quality as timber harvested from the land. There is currently only one company conducting underwater logging, although a number of other companies are also considering this development.
Some of the board of directors feel that Boom (Pty) should pursue this underwater approach and abandon land based logging. The Chief Executive and one other director feel that the underwater approach carries too high a risk.
Required:
(a)
(i) Briefly explain the differences between business ethics and corporate social responsibility (CSR). (5 marks)
(ii) Discuss the CSR issues relating to Boom (Pty)'s business and how the company might improve its CSR position. (8 marks)
(b) With reference to Boom (Pty), evaluate the two approaches to logging and recommend which you think is most appropriate for Boom (Pty). (12 marks)

Added by Thandolwethu S.

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