Feb. 25th 2011
In partial fulfillment of the requirements of ADM 1300
Date: February 25th, 2011
Subject: Derek’s Shawarma
Problem: Derek and Sal needed to decide how to structure the ownership of their business. Alternatives:
* Maintain the status quo
* Choose the general partnership
* Choose the limited partnership
* Choose the public corporation
* Choose the private corporation
* Derek graduated from the Telfer School of Management at the University of Ottawa 13 years ago, and his specialization in management. * Derek started his career in a middle management position at a firm in Ottawa; but Derek didn’t satisfy with his success in it. * Derek’s friend Sal wanted to keep busy in his retirement and he wanted to start a restaurant. * Derek had been a long-time resident in Ottawa; he was familiar with the local market, so he suggested a shawarma restaurant to Sal. Recommendation:
I recommend Derek and Sal choose structure a private corporation. They can sell the shares of stock to just a few people. They have more money to start this business, they will also make more profits in the future owing to the great potential of this business. Derek can use his knowledge of management in this business. Assumptions
1. Derek can quit from his job in order to do his own business. 2. Sal has the resources to run this business; he has enough money to hire employees, to start this business and to rent a space. 3. For the corporation ownership, Derek may need to put amount of money in the business, so that he can hold shares of stock.
Statement of the problem
1. After working at a firm for a few years in Ottawa, Derek realized that he did not feel satisfied with success in the corporate world. 2. Potential promotions were not enough to keep Derek inspired 3. Sal wanted to keep busy in his retirement.
4. Sal was interested in starting a small business.
To start a business, Derek needs to decide how to structure the ownership of their business.
Implications on personnel
1. Derek will feel upset every day and cannot have any motivation to encourage him to do a good job, which may become a prelude of losing the job. 2. Under the condition, Derek may lose his interests in life, begin to resent himself, and become have no confidence doing other things beside the work. 3. Derek cannot get profits from this business; in some ownership of business, he will even lose all of his assets. 4. Derek may begin to think whether he was really familiar with the food market in Ottawa, although he had been a long-time Ottawa resident. 5. Sal may lose some or even all of his money if they choose the wrong structure of the ownership in their business.
Implication on organization
1. Sal will not make investments with Derek, because this failure of business will reflect Derek’s poor ability in management. 2. The restaurant will lose the potential clients who are interested in the shawarma and want to eat at the Derek’s Shawarma restaurant. 3. Failing to structure the ownership may cause many conflictions between Derek and Sal, which including: they cannot divide profits fairly; there will be no agreements to dissolve contradiction between them. 4. It could get harder to reorganize this business, because the first failure of business may leave a scar in their hearts. 5. The restaurant cannot make profits if Derek and Sal give up opening this business. Alternative solutions
No.1: Status quo
The status quo is taking no action to fix problem but instead keep doing as is. For Derek, status quo means staying at the firm in Ottawa. Although this will cost no money, and have less risk for Derek, it will make his life boring and make him have the negative attitude toward life. Derek said he did not feel satisfied with his...