Busn105 Unit 5 Introduction To Business

Introduction to Business
BUSN105 - 1304A - 09
Professor Casey Coots
October 11, 2013

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BUSN105: Scenario

Abstract

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
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.

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BUSN105: Scenario

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,
Profits are still divided up among stockholders, but the initial agreement could suggest that we, the owners, hold a significant portion of the stock. Unless 50% was held, though, we would not retain decision-making power.
A sole proprietorship would be a poor decision for this business because it would restrict the potential growth of the business to that which can be facilitated by the resources supplied by us. It is already shown that we do not have the resources necessary to create the manufacturing infrastructure or start the business and marketing overhead. Thus, if a sole proprietorship was chosen, the business would likely never even get off the ground. Even if it did, we would be at risk every stage of the way as we are responsibly for debts or lawsuits. Partnerships face a similar issue: the partners would be responsible, and whichever partner is more responsible would likely want more of the company 's value and profits. Partnerships also do not have a direct way to raise additional money. Given the need for initial capital as well as ongoing capital, and given the need to reduce risk to the founders, a corporation is the best approach for this business