UNDERSTANDING BUSINESS
UNDERSTANDING BUSINESS
12th Edition
ISBN: 9781264161881
Author: Nickels
Publisher: MCG
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Chapter 8, Problem 2VC
Summary Introduction

Case summary:

F is in a business of quick service dinning. F is the fastest growing restaurant business and receives 4,000 applications every year for franchise. It offers burritos, wraps, soup, salads and other foods also. MC the founder of the company wants to make healthy living easier. With this objective in mind, MC opened the restaurant. Now, MC allows franchise only to those individuals who have the same passion. F uses flat organizational structure. Flat structure removes many layer of management. There is no necessary formal structure. The member of team also works on standing desk. Franchise of F also uses same flat structure and have same environment. Today, franchise of F is spreading faster. In this fast moving world, F has maintained its core value.

Characters in the case: F Company and Person MC.

Adequate information: F Company was founded in 2005. It is now in 300 locations worldwide. F receives 4,000 franchise applications yearly.

To determine: Whether decision making is centralized or decentralized and the meaning of it for the company’s operations.

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Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Answer the following questions for Steve. Explain the corporate characteristic termed “no mutual agency” Explain the corporate characteristic termed limited liability. Explain the term outstanding stock. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? Is it true or false that all forms and classes of stock carry voting rights? Is it true of false that stock sold for amounts in excess of par value results in a gain reported on…
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