Posted: December 5th, 2014

case study

case study

Order Instructions:
Megan has opened a couple of similar restaurants. She has at least two friends who are

willing to invest some money to help get the business moved forward, Tom and Rashida. Her

restaurants have poor cash flow for now, and this is Megan’s first run as an owner in the

restaurant industry. Tom has managed restaurants in the past. Other acquaintances of Megan’s

have been enthusiastic and supportive of Megan and many have expressed interest in helping her

out with the business financially or in some other way. Megan’s goal is to open several locations

for the restaurant, and either go public with the chain in an IPO (initial public offering) or sell the

chain to another, larger and well-established restaurant chain. Megan is concerned that if she

sells an ownership interest or interests in the business, “bean counters” will take over her

business, and adversely affect her creativity to create innovations and update her current product.

She is also concerned that certain employees in her firm, such as Jared, the lead chef, will leave

her company and start competing restaurants with a similar format.

What type of business should Megan form? How can she protect herself from current

employees’ potentially competitive actions if they leave?

Sample paper;

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Case Study: Megan’s Business
A critical analysis of Megan’s case reveals various subtle points that should be considered when deciding on the type of business structure that she should adopt. First, it is imperative to note that she already has two restaurants in place, but she has a deficit in capital, since the business currently has a low cash flow. She also has a bounty of willing investors, but faces the fear of having her innovative ideas being obliterated, or stolen by an errant employee. Based on these factors, I propose that she should adopt a Limited Partnership business structure.
A Limited Partnership consists of a general partner(s), as well as limited partner(s). The latter shares in the business’ profits, however, they are limited in the percentage of losses they share, as dictated by their contributions (Goodgame 83). They are not involved in the daily operations of the business. Based on the above characteristics, the limited partnership is the best choice for Megan, who can assume the position of the general partner, and then enjoin her friends as limited partners (Hopson and Patricia 44). This will enable her receive and use their investment to build her business, but prevent them from interfering with her daily operations.
As for Jared, the lead chef, and other similar employees who may opt out of the entity to start their own using ideas from Megan’s business, it would be crucial for Megan to withhold some critical ideas from them. If some of her ideas are novel, she can register them as her own patent, and protect them using copyright law. However, owing to the competitive and diverse nature of the food industry, this may be challenging. The most effective means to put up with such competition is to develop a loyal and satisfied customer base, through creation of a lasting and attractive brand name (Liu 2827). In such a case, other replicas of Megan’s business will be considered as counterfeits, and she will be able to maintain her customers, who, if satisfied, will act as her marketing evangelists, thereby propelling her towards achieving a sustainable competitive advantage.

Works Cited
Goodgame, John. “New Developments in Master Limited Partnership Governance.” Business Lawyer 68.1 (2012): 81-101. Business Source Complete. Web. 5 Dec. 2014.
Hopson, James F., and Patricia D. Hopson. “Making The Right Choice Of Business Entity.” CPA Journal 84.10 (2014): 42-47.Business Source Complete. Web. 5 Dec. 2014.
Liu, Yang. “Sustainable Competitive Advantage In Turbulent Business Environments.” International Journal Of Production Research 51.10 (2013): 2821-2841. Business Source Complete. Web. 5 Dec. 2014.

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