INTRODUCTION
Today’s business environment requires leaders to have competency in effective organization design and to consider legal factors that influence whether strategic goals are achieved. In this task, you will discuss legal entity types and their influence on taxation, liability, and ownership and control. You will also discuss the legal and ethical obligations that an employer and employees have in a business context.
SCENARIO
A local farmer and a supermarket retailer plan to enter into a business venture to open a downtown farmers market every weekend from April through October. The goal of the farmers market is to bring fresh organic produce to an area of the city that would otherwise not have access to organic fruits and vegetables.
The retailer would like to have more decision-making authority in order to control the marketing and ownership of the warehouse space that will host the farmers market. The local farmer is personally concerned about the financial impact of having a primary stake ownership because the farmer does not want to suffer a large financial loss if the business venture is not successful. (The farmer has been affected in the past by things outside of their personal control, such as excessive rain which caused decreased profits over the past two seasons) The retailer has proposed they include outside investors in order to have access to capital and expertise that will help create distribution efficiencies. The local farmer would like to limit outside investors and external decision-making influence in the business because the farmer doesn’t want to lose primary control of the farmers market.
The local farmer currently grows enough produce to have 20 stalls at the farmers market. The retailer would like to plan for growth by beginning the farmers market with the produce that the local farmer grows and then double the number of stalls offered each year by adding organic options from other regional farmers markets to build sustainable networks. The retailer proposes organizing the farmers market venture as a corporation, while the local farmer recommends organizing as either a limited liability company or a general partnership.
Two years after the retailer and local farmer establish the farmers market, there has been notable growth. The farmers market has expanded to include additional regional farmers who provide more produce every weekend. To manage the farmers market, the retailer and local farmer have hired general managers with extensive experience in organic retail sales and promotion. The retailer requires that some of these managers work overtime hours on the first Saturday of each month so that new products can be staged and merchandised before the market opens each weekend. However, the retailer does not pay overtime wages to the managers, claiming that the required overtime is management training and an investment in their future career development. For some reason, the female managers are always the ones required to do this extra work even though they have similar levels of experience to the male managers.
Besides the general managers, the farmers market also employs several employees. The employees stock the stalls with produce. The managers occasionally require the employees to carry unreasonably heavy boxes of produce from the trucks to the stalls. These heavy boxes should be moved with a hand truck to prevent injury, but hand trucks are not always available. One employee recently strained his back lifting a heavy box.
On the first Saturday in May, the general managers identify substandard produce that has been damaged or is not ripe. The general managers notify the retailer that this produce should not be sold. However, the farmers who provide the produce will only get paid if the merchandise sells, so the retailer tells the general managers that they should display the produce so that customers will not be aware of the substandard quality. The retailer also suggests that if the sales are not 10% higher this weekend than last weekend, the general managers may not receive a full day’s wages for their work today
