What should the management of Sports Products, Inc., pursue as its overriding goal? Why?


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Connor Sephton answered
The over-riding goal of the management of Sports Products, Inc, should be making sure that its investors get the best possible return. The share price of any company reflects its success and so the goal should be to make these prices as healthy as they possibly can be.

• What makes shares valuable?
The supply of shares that are available to buy at any given time is very often called the float. When there are more buyers than there are sellers, the shares are obviously in high demand and are more valuable; if the situation is reversed the price falls accordingly.

In a lot of cases, there is equilibrium in the market because there is a constant flux of buyers and sellers.

This means that the price of a share is determined by the people who are willing to invest in a company at any given time (or not as the case may be). The only reason why anybody would want to invest in a business is because they think that they will be able to make a return on that investment so it is the responsibility of the management of that company to make sure that they have made the right decision.

• Consequences
If the management fail in their duty towards their shareholders, the shareholders will vote with their feet (or in reality, with their money) and investment will dry up. This will mean that share prices will fall and can ultimately mean the downfall of the company concerned.

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