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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?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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L 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?
Transcribed Image Text:L 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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