Week Two Assessing the Goal of Sports Products, Inc - Essay Example

For any organization the main aim should be maximization of the shareholder’s wealth, not just profit maximization of the organization. The shareholders can benefit in two ways; either by receiving dividend or by the internal growth of the company. From last 20 years the company hasn’t paid any cash dividend, so they can only be benefited by rise in stock price. At present the company’s shock price is going down although the company is making a good profit. This clearly indicates that the main goal of company is to just maximize profit as much as possible, because this directly affects the pay of managers.

But on the same time company is losing its reputation in market which is evidenced by the declining stock price. Hence the management of Sports Products Inc. should change their present goal of profit maximization and should pay more emphasis on the shareholders’ benefits which can be only achieved if the stock price increases. As a company receives all its resources from the society, hence they also have some responsibility toward the betterment of the society. They should take care that any of their activity should not degrade the environment.

At present the stock prices are doing down even when the financial report indicates a continuous rise in profits. This clearly indicates that there is some problem in the management. At present the management is emphasizing merely on profit maximization. Basically there are two ways for profit maximization- either increase the revenue or decrease the expenditure. The company is following the second one. They are trying to reduce their expenditure at all possible ways. Even they overlook the pollution norms for reducing cost.

They dump their waste products directly into the adjacent stream. This not only pollutes the surrounding environment but it lead to highly hazardous diseases by polluting