Assessing the Goal of Sports Products, Inc. Case Study
Assessing the Goal of Sports Products, Inc. case study
Michelle Rapley
FIN/419
September 24, 2012
John Rapa
Assessing the Goal of Sports Products, Inc. case study
Introduction
Sports Products Inc. is a large producer of boating equipments and accessories. The two key players within this organization is Loren Segura who works as a Clerical assistant in the accounting department and Dale Johnson who works in the shipping department. Both team members had a concern about the company profits and was equally concerned about the stocks declining in value therefore, Loren and Dale try to strategize what is important to management and how the current options affect their pay directly. (Gitman,2009)
Solution
a. What should the management of Sports Products, Inc. pursue as its overriding goal? Why? Sports Products Inc. will definitely want to maximize their shareholders wealth, which should be the most important goal of an organization although; profit is required to increase the dividends of the company. The managers in Sports Products Inc. must focus on how the organization will continue to profit however; shareholders wealth will increase or maximize while they focus on maintaining their status of providing excellent boating equipment and accessories to their clientele. The firm will also need to come up with a way to incorporate pollution control for the existing problems and a way to pay the additional cost it will incur. The study indicates that the firm has never paid any cash dividends in their twenty-year history and this is how stockholders receive their profit from the organizations earnings. Shareholders fall secondary when it comes to receiving cash dividends or profit because, a shareholder only profits after everyone else in line has received their payments such as the organizations creditors, or suppliers which explains why Sports Products Inc. is being sued by various officials for dumping waste in adjacent streams. The
Michelle Rapley
FIN/419
September 24, 2012
John Rapa
Assessing the Goal of Sports Products, Inc. case study
Introduction
Sports Products Inc. is a large producer of boating equipments and accessories. The two key players within this organization is Loren Segura who works as a Clerical assistant in the accounting department and Dale Johnson who works in the shipping department. Both team members had a concern about the company profits and was equally concerned about the stocks declining in value therefore, Loren and Dale try to strategize what is important to management and how the current options affect their pay directly. (Gitman,2009)
Solution
a. What should the management of Sports Products, Inc. pursue as its overriding goal? Why? Sports Products Inc. will definitely want to maximize their shareholders wealth, which should be the most important goal of an organization although; profit is required to increase the dividends of the company. The managers in Sports Products Inc. must focus on how the organization will continue to profit however; shareholders wealth will increase or maximize while they focus on maintaining their status of providing excellent boating equipment and accessories to their clientele. The firm will also need to come up with a way to incorporate pollution control for the existing problems and a way to pay the additional cost it will incur. The study indicates that the firm has never paid any cash dividends in their twenty-year history and this is how stockholders receive their profit from the organizations earnings. Shareholders fall secondary when it comes to receiving cash dividends or profit because, a shareholder only profits after everyone else in line has received their payments such as the organizations creditors, or suppliers which explains why Sports Products Inc. is being sued by various officials for dumping waste in adjacent streams. The
References: Principles of Managerial Finance, Twelfth Edition, by Lawrence J. Gitman. Copyright © 2009 by Lawrence J. Gitman.Retrieved from University Of Phoenix online material.