Armidale Ltd. is a public company with a leading role in the oil refining industry. In the last five years, though, Armidale Ltd. has started to enter into the renewable energy market, but currently, financial results are not overly encouraging. Armidale Ltd. has traditionally only invested in refining crude oil since its foundation in 1928. The organisational culture at Armidale Ltd. Emphasises strong traditional value and expects that the business to run as usual. The company produces and refines crude oil from light to heavy, and this oil is used in cars, machines and other industrial uses. Last year, the CEO of Armidales Ltd. suggested that the company should enter into the financial instruments market. The CEO overheard a conversation with financial brokers about exceptional performance around oil futures contracts. Excited with the possibility to raise funding for the company, the CEO, with the help of other senior executives, convinced the board of Armidales Ltd. to invest in oil futures. The financial impact was strong, and the company is Investing more and more in oil futures contracts, as a new direction for the company. Armidale Ltd. purchased a significant amount of oil futures contracts to buy and sell crude oil at a fixed price on a range from 1 to 3 years. The CEO proposed four strategies to support the success of this new direction. First, the company should develop a public marketing campaign that emphasises the benefits of Armidale Ltd. for local communities, the employment impact from this company, with the company supporting over 70,000 direct and indirect jobs and investment in community projects such as Helping first-time drivers, competing with the Formula 1 among others. Second, the sales team should emphasise the quality of their products to their customers by targeting prices above the futures contracts. Third, the accounting team should follow the best advice on the valuation of financial instruments. Experts consulted by the senior executives recommend using level 1; however, executives would deliberatively encourage the accounting team to use the levels 2 and 3 for these futures (where possible). Management emphasises the uniqueness of these future contracts in discussions. These futures contracts are attached to oil products where Armidale Ltd. is the sole market provider, such as Super-Arm 98 (gasoline) and Exotic Diesel (petroleum diesel). Fourth, the creative, engineering, and multi-disciplinary teams need to create new oil products every year so as to keep up with the required target of executives in creating new futures contracts. The latest financial statements indicated 30% of profits came from these futures contracts. Executive bonuses were tied to the performance of these futures contracts. Because of this, the CEO changed employment contracts from fixed wages to variable wages linked to the performance of the futures contracts.

Required Critically evaluate this new direction of Armidale Ltd. Include in your evaluation the risks involved and an ethical discussion on the impact of these strategies for at least two users (employees, shareholders, suppliers, communities, executives, etc).