Problem:
Goals of the Firm:
You may have heard big business critized for focusing on short-term performance at the expense of long-term results. How do i explain why a firm that strives to maximize stock price should be less subject to an overemphasis on short-term results that one that simply maximizes profit.And Goals of the firm: We claim that the goal of a firm is to maximize current market value. Could the following actions be consistent with that goal? a. The firm adds a cost-of-living adjustment to the pensions of its retired employees. b. The firm reduces its dividend payment, choosing to reinvest more of earnings in the business. c. The firm buys a corporate jet for its executives. d. The firm drills for oil in a remote jungle. The chance of finding oil is 1 in 5. Goals of the Firm: How do i explain why each of the following may not be appropriate corporate goals:
a. Increase market share
b. Minimize costs
c.Underprize any competitors
d. Expand profits.