THEORY B- Mundo Mistico Theory 2 Luther Lopez, the president and CEO of Mundo Mistico, Inc., a film production firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediatety prior to his hospitalization, Mundo Mistico had experienced a sharp decline in its share price, and trading activity becarne almost nonexistent. The primary reason for this was concern expressed in the media over a new untested film production system implemented by the company. Mr. Lopez had been unwilling to subrit the procedure o testing before implementation, but he reluctantly agreed to limited tests after the system was operational No problems have been idetified by the tests to date.
THEORY B- Mundo Mistico Theory 2 Luther Lopez, the president and CEO of Mundo Mistico, Inc., a film production firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediatety prior to his hospitalization, Mundo Mistico had experienced a sharp decline in its share price, and trading activity becarne almost nonexistent. The primary reason for this was concern expressed in the media over a new untested film production system implemented by the company. Mr. Lopez had been unwilling to subrit the procedure o testing before implementation, but he reluctantly agreed to limited tests after the system was operational No problems have been idetified by the tests to date.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Transcribed Image Text:THEORY B- Mundo Mistico
Theory 2:
Luther Lopez, the president and CEO of Mundo Mistico, Inc., a film production firm, was recently
hospitalized, suffering from exhaustion and a heart ailment. Immediatety prior to his hospitalization,
Mundo Mistico had experienced a sharp decline in its share price, and trading activity becarne almost
nonexistent. The primary reason for this was concern expressed in the media over a new untested film
production system implemented by the company. Mr. Lopez had been unwiling to subrrit the procedure
to testing before implementation, but he reluctantly agreed to limited tests after the system was
operational No problems have been identified by the tests to date.
The other members of management called a meeting to determine what they should do. Thanos
Araneta, the marketing manager, suggested that the company purchase a large number of treasury
shares. In that way, investors might notice that activity had picked up, and might decide to buy some
more shares. This plan would use up mostof the company's available cash, so that there will be no
money available for a cash dividend. Mundo Mistico has paid cash dividends every quarter for over ten
years.
Is Mr. Araneta's suggestion ethical? Explain.
2. Is it ethical to discontinue the cash dividend? Explain.
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