What is the primary requirement for a firm regarding management and control?

The primary requirement for a firm regarding management and control emphasizes the need to take reasonable care in organizing and controlling its affairs effectively. This means that a company must ensure that its operations are well-structured, efficient, and comply with relevant regulations and standards. Effective management and control involve establishing appropriate policies, overseeing procedures, and maintaining adequate systems of governance. This is essential not only for the firm’s operational effectiveness but also for ensuring the protection of stakeholders' interests, including customers, employees, and investors.

While innovation, profit maximization, and minimizing operational costs are important aspects of a business strategy, they are not the foundational requirement for management and control. A firm could innovate or optimize costs without effective management, which could lead to inefficiencies or regulatory breaches. Thus, the overarching responsibility lies in organizing and controlling its operations responsibly and effectively, which directly impacts the firm's ability to succeed in the long term.