CASE STUDY: ASSESSING THE GOAL OF SPORTS PRODUCT, INC
1. DEFINING THE ISSUES
The firm's stock price has been declining nearly $2 per share within the past 9 months but the firm's profits had been rising. The workers share their frustration upon the news because they have been working efficiently and cost-effectively in order to not waste any packing materials; thus assist to the raising of the firm's profit. A clerical assistant in Accounting Department of the firm discovered documents that describing the firm profit sharing plan which all managers get to compensate partially on the basis of firms profit. As the profit gives big impact to their pay, the managers paid full attention solely in making profits rather than maintaining the stock's price. The stockholders only receive cash dividends and the company has never pay dividend for 20 years, and they did not gain anything directly from the profit. To make it worse, the company was sued by the state and federal environmental officials for dumping pollutant in adjacent streams. The company minimizes their cost in order to maximize their profit.
2. DISCUSSING THE ISSUES
For a company to push and drives their employees to work efficiently and effectively is common. For Sports Product Inc, the packager from Shipping Department and his co-workers had been working hard to not waste any packing materials in order to minimize lost. In spite of the hard work, the firm however failed to acknowledge their efforts which lead to a raise in the company's profit by not paying any dividend for 20 years. These employees have been performing productively to deliver the firm's target to generate higher income. However, gaining higher returns does not guarantee the stabilization of stock price of a company. According to Harper (2010), stock price is influenced by company performance and market force which are supply and demand; though the variables do not truly determine the up and down of stock...