Why would entrepreneurs open themselves up to personal financial losses by using a proprietorship rather than a company?
Why do suppliers sometimes ask entrepreneurs of small companies to provide personal guarantees for a line of business credit? If an entrepreneur is asked (forced) to provide personal guarantees, then what personal protection does a company as a legal form really provide?
Does the old saying "You get what you pay for" apply to a board of directors or a board of advisors?
Design a structure for the following organization and detail the changes that you would make (if any) to that structure as the company develops.
Stage 1. You are the CEO of a company ("Party On") that specializes in the sale of party merchandise (e.g., paper cups, plates, and streamers). You have a retail store and three employees, and you serve the local area. A differentiation strategy is used. What structure (configuration, prime coordinating mechanisms, and type of decentralization) are you going to implement and why? Which is the key part of the organization?
Stage 2. After five years, Party On has expanded to 150 stores throughout the United States. The company is still following a differentiation strategy, selling primarily the same range of products in each store. What structure (configuration, prime coordinating mechanisms, and type of decentralization) are you going to implement and why? Which is the key part of the organization?
Stage 3. After a further seven years, Party On has expanded to 225 stores in the United States, 57 stores in the UK, 30 stores in Sweden, 10 stores in France, 8 stores in Mexico, and 5 stores in Germany. The company's strategy is to sell its range of products through company-owned stores at a premium price. What structure (configuration, prime coordinating mechanisms, and type of decentralization) are you going to implement and why? Which is the key part of the organization?
Stage 4. Not long after the new structure has been put in place, a consortium of department stores offers you a very lucrative contract to sell Party On's products in its stores worldwide. Its requirement is that Party On's current retail stores must be closed over a five-year period (it doesn't want to compete with Party On), and it wants to offer the products at lower prices. You accept the terms and conditions of the deal. What structure (configuration, prime coordinating mechanisms, and type of decentralization) are you going to implement and why? Which is the key part of the organization?
Stage 5. The contract has been enormously successful. Further, a number of other opportunities have arisen. First, the founder and CEO of your major supplier of party merchandise died and you were able to purchase the company at a very reasonable price. Second, rather than close your outlet stores, which are in excellent positions, you decided to sell sporting collectibles (e.g., baseball cards, signed photographs, and jerseys) at a very nice mark-up indeed. However, while U.S. sporting collectibles are somewhat popular outside the United States, each country is quite different. What structure (configuration, prime coordinating mechanisms, and type of decentralization) are you going to implement and why? Which is the key part of the organization?
