Case Analysis: Assessing the Goal of Sports Products, Inc.

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Case Analysis: Assessing the Goal of Sports Products, Inc. Submitted by: Group 1 Acebedo, Gladys Bandiola, Penuel Bautista, Jherwienne Cruz, Abbie Inojales, Geraldine Miguel, Gen Pili, Lian Reyes, Alyssa Susaya, Jennylyn Tondo, Elma Submitted to: Prof. Jenely P. Sabio-Almirol December 5, 2011 a. What should the management of Sports Products Inc. pursue as its overriding goal? Why? The management of Sports Products Inc. should pursue maximization of shareholders’ wealth as its paramount goal. As far as we know, the stockholders are the owners of the firm and the ones bearing the most risk in running it. In line with this, the board of directors and/or the management is…show more content…
Such decisions may affect the company’s profitability today but judging from the fact that high risk means low stock price and vice-versa, high return waits in the future. [2] d. Does the firm appear to have an effective corporate governance structure? Explain any shortcomings. The firm doesn’t appear to have an effective corporate governance structure. An effective corporate governance regime includes prosecution for individuals who conduct unethical or illegal acts in the name of the enterprise [4]. Why so that there were no discussions in regards to the person/s responsible for dumping pollutants in the adjacent stream? Wasn’t the disposal unethical enough to violate the name of the enterprise? The management’s failure to recognize that such action ruins the reputation of the company is ineffective itself. The most important shortcoming of the firm is the management or the managers who failed to amend the paramount goal of the company. Yes, it is reasonable to focus on profit maximization for the first few years of the business but keeping that as overruling per se for 20years isn’t healthy at all. The shareholders are the true owners of the business and the ones bearing the most risks, let alone being the principals who are the residual claimants. Maximizing shareholders’ wealth should always be one of the top priorities for not only their resources run the business but the means concerning the
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