Business Organizations

Community Counseling Service Need for non-competition clause in contract – but must be careful not to violate public ppolicy What is the duty of a party to the firm when he is planning to leave but hasn’t yet left? You cannot seek out firm’s clients while you are still working there Hamburger Did not solicit clients’ business while he was still their employ Anderson Rule: categorical – fiduciary duty obliges the fiduciary to act in the best interests of his client or beneficiary and to refrain from self-interested behavior not specifically allowed by the employment contract.Easterbrook and Fischel Rule: difficult to apply in practice – socially optimal fiduciary rules approximate the bargain that iinvestors and agent would strike if they were able to dicker at no cost. (not a great rule because there are always transaction costs) Limitations on the right to discharge Foley Must decide what the relationship between the parties is: independent contractor, employee, etc? Cannot be fired for irrational reasons or for certain protected reasons (if employee) Employees invest and rely, therefore they need protectionAlleged public ppolicy: employees doing the right thing for their employer Court says there is no public interest in helping a private employer Employer’s interest ? public interest Employer handbook can be used as evidence to prove it is not at-will employment Tortious breach of good faith and fair dealing – Court says no, there would be no duty to mitigate for contract breaches, therefore it’s not a good idea Duty to Creditors (39-49) Blackburn P reasonably believed A was acting with the authority of P, P did nothing to discourage her belief Sennot All partners are agents for the principal, by default PARTNERSHIP Partnerships and other Non-Corporate Forms GPs An association of two or more people to carry on, as co-owiners of a business for profit A lot of litigation is decided on whether or no t the parties were co-owiners Intent that counts is not the creation of a partnership, but the intent to carry on a business for profit as co-owner Evidence of whether or not there is a partnership:Control Sharing of profits and losses JVs Partnership for a limited time and limited purpose LPs Limited partners are very much like stockholders – they are just investing their money, they don’t have management rights/ powers and are not liable for partnership debts Generally, only one general partner and multiple limited partners/ passive iinvestors Cannot accidentally fall into a limited partnership because LPs must be registered with the government (gen. state) LLCsForm of a business organization for a small number of people with a relatively close relationship but who don’t want to be personally liable for business expenses As ssimilar as possible to a corporation without being taxed like a corporation Interests are not freely transferrable like in a corporation LLPs Same as general partnership except creditors cannot go after partners personal wealth for partnership debt LLLPs The general partner is no longer liable for partnership debts Same can be achieve if the GP is a company (or some other non-human) Characterizing the RelationshipByker v. Mannes The definitive way to ensure your relationship is not characterized as a general partnership is to become a different type of business organization You can always leave a partnership, at any time You can fall into GPship Hynansky v. Vietri H never filed a partnership tax return and treated the losses as his own Pretty iron-clad rule: you have a to have a right to profits to be considered a partner Sharing Profits and losses Kovacik v. Reed Didn’t talk about who was going to share losses One gave money, the other gave only labor Default rule is that losses follow profitsLost oopportunity costs for both parties Fiduciary Duty (75-87) Duty of Loyalty Meinhard v. Salmon Question of fiducia ry duty Meinhard claims Salmon should have told him about the new deal Salmon got the oopportunity through being a partner, therefore he owes Meinhard, at least, the duty to disclose Salmon has a duty to Meinhard in their common business – what is their common business? Revised Partnership Act  §403: Duty of care  §404: Duty of loyalty  §103(b): Set of default rules, subject to limitations – (3) duty of loyalty cannot be taken away Self-dealing Business Organizations Founder's syndrome: When founders try to hang on to control to the detriment of the organization is widely identified as an issue for non-profit and for-profit organizations. Recently, it's emerged as a concern in the world of tech start-ups, where founder identification with the business or product is often as passionate and personal as that of social entrepreneurs (Linnell, 2004; Rowat, 2007). The common thread in founder's syndrome across sectors is the type of person who establishes a non-profit, tech firm, or social entrepreneurship. In all instances, these individuals tend to be passion-driven people with a sense of personal mission that translates to their organization. They are, understandably, highly identified with the organizations they create, and this individual sense of commitment is often critical to bringing the organization through its early growth stages.There is no doubt the founder is central in the early days of social entrepreneurship. Later, during the growth stage, the founder may retain leadership importance to a significant degree and, according to Johnson (2014), there is evidence that founders, with their charisma and persuasive ability, are vital to attracting investor capital during the scaling stage (Johnson, 2014). At the critical growth stage, it is necessary for businesses to replace individual leadership with corporate leadership, establishing the governance systems and processes required by larger, more complex, and necessarily more accountable, organizations. Founders who cannot or will not let go of personal influence when this moment arrives inadvertently endanger the future of their organization and its mission with their determination to stay in control. None of this may ultimately be the founder's fault. In fact, rather than being seen as a failure on the part of the founder, founder's syndrome is seen as a failure of a more extensive organizational leadership that allows a focus on the founder to distract from a focus on business strategy and mission (Schmidt, 2013). Businesses that neglect to create governance systems create a climate where founder's syndrome (among other issues) can adversely affect the company. Good governance practice provides a way for organizations to make a smooth transition from founder-led to governing board-led organization. Establishing a strong, unified, independent board with robust accountability and decision-making systems makes companies capable of avoiding some of the worst negative impacts of founder's syndrome without destroying the positive benefit the founder brings to the organization or sacrificing the connection between mission and business established by the founder. Business organizations Business organizations today operate in an environment that is characterized by intense global competition.A sound strategic management perspective is imperative for any enterprise to achieve sustainable strategic competitiveness and earn above average returns. Business leaders need to adopt a new mind-set that values flexibility, speed, innovation, integration and the challenges that evolve from constantly changing conditions (Hitt & Duane 2006: 2-10).Intel Corporation of the US is the world’s largest semiconductor company. Paul Otellini is its Chief Executive Officer and Craig Barrett is the Chairman, Board of Directors.Intel combines advanced chip design capability with a leading-edge manufacturing capability. It unveiled its new branding and marketing strategy in the year 2006. It included a new logo and tagline â€Å"Intel leap ahead† in accordance with the changing times (Edwards 2006: 43-53).Today Intel is the leading manufacturer of high quality processors, chip sets, motherboards, adapters, Ethernet controllers, micro controllers, PCI bridges, storage systems etc. for a wide range of applications like desktop, laptop, servers and workstations, networking communications, consumer electronics, health care sector and entertainment industry.A vision is a road map showing the route a company intends to take in developing and strengthening its business. Well-conceived vision statements are distinctive and specific to a given organization. (Thomson, et. Al., 2006, pp. 15-20).The vision of Intel Corporation is â€Å"At Intel, we constantly push the boundaries of innovation in order to make people’s lives more exiting, more fulfilling, and easier to manage. Our unwavering commitment to moving technology forward has transformed the world by leaps and bounds.We are a company that’s always in motion, fuelling an industry that never rests. We inspire our partners to develop innovative products and services, rally the industry to support new products, and drive industry standards. We do this so that we can collectively deliver better solutions with greater benefits more quickly†.Through its vision statement Intel Corporation has set a very clear and convincing road map for its sustained growth and success.An organization’s mission is the very purpose or the reason for the existence of the organization. The mission statement of Intel is very well conceived and defines the fundamental reason or unique purpose of its existence.It sets the company apart from other firms of its type in the semiconductor industry. It also promotes a sense of shared expectations in its employees and it also communicates a positive image about itself to important stakeholders of the company like its shareholders. Objectives are the end results of all the planned activities of a given company.The objectives of Intel Corporation are to extend leadership in silicon and platform manufacturing, deliver architectural innovation for m arket-driven platforms and drive worldwide growth. The achievement of the objectives so stated by Intel Corporation will definitely result in the fulfillment of its mission statement.Scanning of the external environment helps the companies to understand and analyze external strategic issues and factors to identify the opportunities and threats facing it.The factors having the greatest impact on the company’s strategy-shaping mainly pertain to the company’s immediate Industry and the environment in which it operates. Intel Corporation is a leading player in the semiconductor industry which comprises of all organizations that are engaged in the design and manufacture of semiconductor devices.Currently in the semiconductor industry the threat of new entrants is low as the entry barriers are high. The industry is characterized by rapid technological advances, continuous product innovations, economies of scale in manufacturing of the products and strong learning/experience curve effects driving down costs continuously.The inter firm rivalry is high and there is intense competition between the major players in this industry like Intel, Samsung, Texas Instruments, ST Microelectronics, NXP, Freescale, Infineon etc. The threat of substitutes and the bargaining power of the suppliers in the semiconductor industry is low.As the industry sells to a small number of very large customers who buy in very large quantities the bargaining power of the customers is very high. The relative power of the other stake holder that is the government is high as the U.S. government regulates exports and certain uses of some types of semiconductors due to their potential use in military applications.