Introduction to Business
BUSN105 - 1304A - 09
Professor Casey Coots
October 11, 2013
This scenario involves a number of competing issues that must be counter-balanced and addressed. First of all, on the positive side, it is important to note the vast potential opportunities available in this device idea. This device is anticipated to have numerous applications, each of which may be very profitable. Thus, it is in our best interest to maintain as much connection to the profit of the device as possible as the value will only increase over time. However, on the negative side, we do not have what it takes to execute this idea. We do not have the money to invest in it and build up the necessary manufacturing infrastructure, we do not have the know-how to actually execute that manufacturing infrastructure, and we do not have the experience in running a company or marketing a product. Therefore, while we want to retain as much of the profit of the company as possible, we also will almost certainly have to extend significant portions of the product's potential value to others who have the means and know-how to bring the product to fruition. Otherwise, no one will ever make a profit off the idea for this device. It is also important to note that at every step of expansion, there is significant financial risk involved.
There are three different types of businesses that could be used to execute this idea: a sole proprietorship, a partnership, or a corporation. The sole proprietorship is the simplest of these ideas. In this idea, we would retain completely decision-making power over the entire business (Pecher, Steiber, & Heckl 2002). All resources must be supplied and secured by the individual, but the individual also gets to retain all profit and decision-making power. The individual also assumes all the risk (except in the cast of Limited Liability Corpoations, e.g. Crusto 2001). A...
References: Crusto, M. F. (2001). Extending the Veil to Solo Entrepreneurs: A Limited Liability Sole Proprietorship Act (LLSP). Colum. Bus. L. Rev., 381.
Gaberman, R. M. (1972). Partnerships and Corporations. Annual Survey of Massachusetts Law, 1972(1), 7.
Klein, W. A., Ramseyer, J. M., & Bainbridge, S. M. (1997). Cases and materials [on] business associations: agency, partnerships, and corporations. Foundation Press.
Pecher, I., Steiber, N., & Heckl, E. (2002). Support Services for Micro, Small and Sole Proprietor Businesses. Enterprise DG.
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