Essay Example on Expert Eddy's Business: Legal Form of Ownership

Introduction

Eddy is an expert in the world's best recipes for Hotdogs and Chili. He intends to create a business for himself through the suggestions of his friends and family. As a stock trader, Eddy earned enough to his fortune. Thus, financing the business will not be an issue for him. Eddy's worry is his lack of business experience and managerial risks. Therefore, the following sections of this paper address Eddy's worries.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Recommended Legal form of Ownership

It is recommended for Eddy to opt for a Limited Liability form of business. Despite its quite procedural set-up, it is better than a sole proprietorship than only requires an operating license. For instance, if the customers file a lawsuit for experiencing an allergy upon consuming Eddy's hotdogs, it will be easier for him to settle the matter without affecting his personal property like houses. The lawyers will only charge him according to the business net worth rather than personal property. Contrarily, sole proprietors have their personal wealth at risk whenever they are faced with a lawsuit. Limited Liability Companies also have an advantage over other corporations (Freedman, 2000). Opening an LLC does not require a shareholder meeting, managerial formalities, or the creation of a board of directors. Essentially, an LLC will allow Eddy to use profits the way he plans, unlike corporations that require profits to be shared according to shareholder capital ratio.

Eddy's Proposed Formal Organizational Structure

It is recommended for Eddy to follow a hierarchal organizational structure in his new business. The model involves planning the organization's structure from the top management to the lowest employee depending on qualifications and business needs. A good example of a top-down structure is shown below.

The above structure has merits, such as availing clarity for reporting and gives the owner authority over his employees. Eddy will receive reports directly to him concerning issues affecting the business. For his lack of managerial skills, he has the office team to enlighten him on how to go about the business. The team includes marketing, finance, sales, human resource, and administration. Eddy will also have a clear communication pathway. Eddy will have three departments, office team, foods, and services. Each department will have a manager who receives orders from Eddy or his Personal Assistant and directs employees on what to do and how (Lancichinetti et al., 2009). Employees will, in return, report to their managers about their assigned duties. It is the duty of every manager to report to the Chief Executive Officer (Eddy, or his PA) about the progress in their areas of jurisdiction. Conversely, hierarchical structures inhibit collaboration within the organization. Employees feel they have to report to their seniors only for directions rather than seeking ideas from their colleagues in other departments.

Eddy's Motivational Strategy

Eddy's thoughts that employees deserve motivation are in line with any other business that seeks to achieve job satisfaction and employee loyalty. The recommended method of motivation is focusing on factors that make employees feel either good or bad about their jobs. As proposed by Herzberg, the two-factor theory addresses the intrinsic and extrinsic factors that promote employee performance at the workplace (Alshmemri et al., 2017). Intrinsic factors come from within, which include the employee's desire to achieve job satisfaction. They include responsibility, recognition, advancement, and achievement. Eddy should also focus on extrinsic factors like status, company policies, remuneration, supervision, administration, and inter-professional and personal relations.

Pros and Cons of Eddy Franchising with the Early Years of Operation.

Franchising implies buying an already existing fast food restaurant that generates profit. If Eddy goes for this idea, he may spend a little more than starting his own business. However, one merit of buying an operating restaurant is that the profits are guaranteed. Also, since Eddy does not have managerial skills and professional support, buying a franchise will work to his advantage since he will have marketing support. A franchise comes with sales and marketing professionals who will help Eddy in maximizing his profits. Other advantages include easy access to financing by banks, lower inventories, brand recognition, and a good reputation (Lafontaine, 2014). Contrarily, one of the disadvantages of franchising is that it requires large investments. Eddy may also struggle with labor issues that include hiring and training employees. Other concerns in franchising include low margins, longer work schedules, and zoning issues.

Conclusion

Conclusively, Eddy intends to start a fast food restaurant based on his best recipes of hotdogs and chilies. He has ideas from family and lacks managerial skills. Financing the business will also be effective since he has fortunes from his current job as a stock trader. Therefore, it is recommended for him to set up a limited liability company that does not risk his personal property, is easy to establish and will make him have total control over profits. Eddy will also use a hierarchical model of organizational structure that allows the level of authority and enhances formal communication. It is also recommended for Eddy to use Herzberg's two-factor theory when establishing intrinsic and extrinsic factors that motivate his employees. Eventually, franchising comes with its positives such as marketing support and profits, while its cons include low margins and zoning issues.

References

Alshmemri, M., Shahwan-Akl, L., & Maude, P. (2017). Herzberg's two-factor theory. Life Science Journal, 14(5), 12-16https://pdfs.semanticscholar.org/d29c/feafa46a87b62839875cb485387dccf77eef.pdf

Freedman, J. (2000). Limited liability: a large company theory and small firms. The Modern Law Review, 63(3), 317-354.

Lafontaine, F. (2014). Franchising: directions for future research. International journal of the economics of business, 21(1), 21-25. https://www.tandfonline.com/doi/abs/10.1080/13571516.2013.864124

Lancichinetti, A., Fortunato, S., & Kertesz, J. (2009). Detecting the overlapping and hierarchical community structure in complex networks. New journal of physics, 11(3), 033015. https://iopscience.iop.org/article/10.1088/1367-2630/11/3/033015/meta