Assessing the Goal of Sports Products, Inc.

Essay by adelescent88University, Bachelor's August 2009

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tonUniversity of Phoenix-Online Assessing the Goal of Sports Products, IncIn the past 9 months, the Shareholders of Sports Products, Inc. have lost $2.00 per share in the value of their stocks. State and Federal Environmental Officials are suing Sports Products for the dumping of pollutants from their boating equipment and accessory products. The company gossip is that managers are trying to increase their income through profits. The concern is that stockholders are losing money because of the declining value in the company's shares. The intent of this paper is to explore Sports Products, Inc. circumstances, evaluate the apparent company's problems, and express possible recommendations for improving the company's stock prices. The circumstances, which include stock prices decreasing while profits are increasing indicate there is a possible agency problem where management is misdirecting their powers of running the company's affairs.

It seems as if Sports Products, Inc. management has ignored their intended goal of pursuing the interest of shareholders and began greedily increasing their paychecks by allowing pollutants to be dumped into an adjacent stream instead of paying the required hazardous waste disposal costs for environmental products.

As a result, the state and federal environmental suit against the company the shareholders have evaluated the environmental circumstances and the firm's owners believe the ethical approach in controlling the pollution issue is to incur the expense of remediation. Although, the cost of remediation is expensive and will undoubtedly affect the company's profits. This executive decision is in the best interest of the company owners because the loss of company profits does not affect the owners directly and the company has an opportunity to restore their reputation, which, most likely will result in the quality of company stocks and increase value once again. The firm's corporate governmental structure may have had a part to...