a. What should the management of Sports Products strive to achieve as a primary objective? And why? b. Does the company seem to have an agency problem? Answer with explanation. C. Evaluate the company's approach to reducing pollution. Does it sound ethical? Vhat are the best benefits that business owners can get from carrying Pollution eduction expenses despite the negative impact on profits?
a. What should the management of Sports Products strive to achieve as a primary objective? And why? b. Does the company seem to have an agency problem? Answer with explanation. C. Evaluate the company's approach to reducing pollution. Does it sound ethical? Vhat are the best benefits that business owners can get from carrying Pollution eduction expenses despite the negative impact on profits?
Chapter17: Organizational Planning And Controlling
Section17.6: Employees' Responses To Planning
Problem 3CC: How is goal setting tied to job satisfaction and performance?
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Evaluation of the goal of Sports Products Company
Mona and Hamad work for Sports Products, one of the largest manufacturers of
boat equipment and accessories. Mona works as a clerical assistant in the accounts
department, and Hamad works as a packaging worker in the shipping department.
One day, during their lunch break, they were talking about the company. Hamad
complained that in his work he was always careful not to waste packaging materials
and always performed his work efficiently and cost-effectively. Despite the efforts of
he and his colleagues in the division, the company's stock price has fallen to about
$2 per share over the past nine months.
Mona indicated that she shares Hamad's frustration, especially as the company's
profits were increasing. Neither of them knew the reason for the decline in the
company's share price despite the increase in profits. Mona noted that she has seen
documents describing the company's profit-sharing plan, under which all directors
are partially compensated based on the company's profits. She also indicated that
profits may be the important factor for management; Because it directly affects the
salaries of its members. Hamad said: "This talk is illogical, because the shareholders
are the ones who own the company. Shouldn't the management do what is best for
the shareholders' interest? Something is wrong!" "Well, maybe that explains the
company itself's lack of interest in the share price," Mona replied. "The only dividends
that shareholders receive are in the form of cash dividends, and this company has
not paid any dividends in its 20-year history. So we, as shareholders, do not benefit
directly from profits. The only way for us to benefit is for the stock price to go up."
Hamad nodded in agreement, "Maybe this explains why the company is being sued
by local environmental officials for dumping pollutants into the nearby river. Why
spend money to reduce pollution? This increases costs, reduces profits, and thus
reduces management revenues!" "
Required
a. What should the management of Sports Products strive to achieve as a primary
objective? And why?
b. Does the company seem to have an agency problem? Answer with explanation.
C. Evaluate the company's approach to reducing pollution. Does it sound ethical?
What are the best benefits that business owners can get from carrying Pollution
reduction expenses despite the negative impact on profits?
d. Does the company appear to have an effective corporate governance structure?
Please clarify any shortcomings.
e. In light of the available information, what specific recommendations can you
make to the company?
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