Assessing the Goal of Sports Products, Inc.
Assessing the Goal of Sports Products, Inc.
That makes sense on why Sports Products Inc. They are saving money on pollution control by dumping pollutants in the nearby stream in an effort to keep profits up. What should the management of Sports Products, Inc.
It is apparent to investors due to the decline in stock prices even though experiencing an increase in profits that Sports Products, Inc.
Instead their focus on profits to the benefits of managers through performance bonuses has led them to make unethical decisions that have given them a reputation of not being environmentally friendly and has scared off potential investors.
If the company is not managed properly to maximize the shareholders wealth, investors will have no desire to accept the risks for that business to succeed. Investors will not risk investing into a company that is not focused on maximizing the shareholders wealth and that has contributed to the decline in overall stock prices.
Does the firm appear to have an agency problem? Yes the firm does have an agency problem. The agency relationship is currently between stockholders and management and they have a conflict of interest.
The managers are running the day-to-day operations of the company and making decisions in their best interest by saving money on pollution control in an effort to increase profits that has no benefit to shareholder and only benefits the managers. Instead the focus should be on paying out dividends which have never been paid out.
Yes, the company is making deliberate decision to increase profits at the expense of the stock prices and the environment. Their actions suggest that they were only looking out for their best interest at the expense of the shareholders, environment and the people living in the local vicinity and this is morally unethical.
By incurring the expense to control pollution would create goodwill towards the company by being a good corporate citizen and would have favorable long-term results even if it has an immediate negative effect on profits.
Does the firm appear to have an effective corporate governance structure? The company does not appear to have an effective corporate governance structure. It does not appear that there are any explicit or implicit contracts between management and the stakeholders outlining responsibilities, rights, or distribution of profits and there does not seem to be any checks and balances, or procedures for reconciling conflicts.
Conclusion In conclusion, I would recommend that the company implement checks and balances through a corporate governance structure that outlines responsibilities, shareholders rights, and procedures for reconciling conflicts, and start paying out dividends.
In addition, I would recommend that the company start focusing on being a good corporate citizen by being accountable to the environment and the community in which it does business. Retrieved Novemberfrom BusinessDictionary.Assessing the goal of Sports Products, Inc. and Managerial Finance.
Text Case Study. Read the case study from the e-text, Principles of Managerial Finance, (11th ed.)by Gitman, Assessing the Goal of Sports Products, Inc. located at the end of Chapter One. E-PRODUCTS.
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Assessing the Goal of Sports Products, Inc. Words | 5 Pages Running head: TEXT CASE STUDY 1 TEXT CASE STUDY PAGE * Arabic * MERGEFORMAT 2 Assessing the Goal of Sports Products, Inc. FIN/ Finance for Decision Makers Assessing the Goal of Sports Products, Inc.
Chapter 1 Case: Assessing the Goal of Sports Products, Inc.
Loren Seguara and Dale Johnson both work for Sports Products, Inc., a major producer of boating equipment and accessories.
Loren works as a clerical assistant in the Accounting Department, and . More Essay Examples on Management Rubric. The firm appears to have an agency problem in this case. The conflict of the contractual relationship between the shareholders and the board of directors is so obvious that even the subordinates began to question the .
tonUniversity of Phoenix-Online Assessing the Goal of Sports Products, IncIn the past 9 months, the Shareholders of Sports Products, Inc. have lost $ per share in the value of their stocks.4/5(3).