Question

Alberto, Billy Bob, and Cat are Mesa college graduates, and Alberto has come up with an idea for a new product that he believes could make the three of them very rich. His idea is to manufacture soft-drink dispensers for home use and market them to consumers throughout the World. Alberto's personal experience qualifies him to be both first-line supervisor and general manager of the new organization. Billy Bob is a born salesperson. Cat has little interest in sales or management but would like to invest a large sum of money that she inherited from her Aunt. What factors should Alberto, Billy Bob, and Cat consider in deciding which from of business organization to adopt? (Analyze Major Business Forms)

HOMEWORK FORMAT

FACTS- (This should be real easy- they come right from the book)

ISSUE(s)- (What is the dispute between the parties? What is question to be discussed?)

LAW- (What is the applicable law?) Research the law in the chapter, cite and define/explain which laws are applicable.

DISCUSSION- (This is your analysis-include major and minor points and opposing points of view or counterpoints to add depth to your analysis. Remember, use proper paragraphs. Submissions should be at least 2/3 paragraphs.)

CONCLUSION -(Sometimes referred to as the Resolution-I should be able to know your conclusion by the way your framed your issue and by your Discussion-go back to your Issue- see if you answered the question(s) posed in a sentence or two at best.)

Answer 1

Facts - The five college graduates of Mesa i.e, Alberto, Billy Bob and Cat will have to initially understand the signifincant demand of their newly invented product soft-drink dispensers. For this, they have to undergo a market research at multiple levels garnering data about the demand of the soft-drinks in the current industry & potential areas to venture, the purchasing power of the target segment (maybe millennials or business people) and how they are going to supply & distribute their product to these ventures. These basic understanding of the facts will paint a clear picture whether they have to pursue down with the feasibility of the project or not.

Issue - The basic underlying concern is that they are not experienced enough to know about start-ups & entrepreneurship & in particular about product management. At a later stage, there also might be issues with business and functional aspects of running an organization at a legal, financial and operational levels that will challenge their reputationa and resilience.

Law- For setting up of company, basic guidelines and registering details have to read from SEC regulations act & IFRS act for tax purposes.They must have a clear understanding about their about to be set up comapny structure and share holders pattern.

Discussion - Given the differences in interest with the concerned parties i.e; Cat is not interested in sales and management while she is ready to invest her amount in the company, it will be wise to differentiate between the management and the ownership of the comapny to avoid conflicts of interese In this case. It will also lead to better treatement of each members professionally while working in the organization/

Again there is a conflict/dilemma of the Principle-Agent problem where Alberto, Billy Bob who are actually responsible for management and selling of the product dispenser will have to be extra concerned about the Cat's invested money. since she is also a shareholder which might affect the overall performance of the organization.

Conclusion -With all the availale & aforementioned facts and discussion about the case, it would be ideal to start with a limited liability company (LLC) with Cat being one of the major investor as well as shareholder. One of the opportunities she can venture is by appointing a trusted director for running the operations of the company.