In this project, you are determining the best legal form and organizational structure for your new business. The nature of the organization’s business and the

In this project, you are determining the best legal form and organizational structure for your new business. The nature of the organization’s business and the environment the business operates in are factors you must consider. Initially, Sunburst will operate locally, but within five years operations will go national (or international). Read about how you might plan these stages in Creating and Managing a New Business. In the first part of this project, need to have a narrated PowerPoint presentation for potential investors and partners in your new company. In this presentation, you will analyze the pros and cons of various forms of business and recommend the best legal form of business to achieve your organization’s goals. In the second part of this project you will design an effective organizational structure for the business at its inception and in its next phase of growth. To achieve this, you’ll need to create one short paper with three sections: (1) a brief mission statement reflecting the primary goals of the business, (2) a detailed organization chart, and (3) a rationale statement that explains and supports, thoroughly but succinctly, the mission statement and structural decisions reflected in the organization chart. When you submit your project, your work will be evaluated using the competencies listed below. You can use the list below to self-check your work before submission. ·  1.7: Create neat and professional looking documents appropriate for the project or presentation. ·  1.8: Create clear oral messages. ·  2.5: Develop well-reasoned ideas, conclusions or decisions, checking them against relevant criteria and benchmarks. ·  7.1: Analyze the legal forms of business organization and make recommendations to support business decisions. ·  9.1: Design organizational structure, systems and processes that support the strategic goals of the organization. ·  10.4: Make strategic managerial decisions for obtaining capital required for achieving organizational goals. ·  13.2:Make and implement new initiative or enterprise. ·  13.3: Make and manage a new enterprise Using the information you gathered in the previous step, make narrated PowerPoint. Because you will not deliver this presentation in person, it should follow the form of asynchronous presentations. Be sure to meet the following requirements: ·  Include a title slide, with your name on it, introducing the presentation. ·  On the presentation slides, include only the major bullet points for each issue. ·  Include no more than 15 slides (not counting titlepageor references list). ·  Cover all the elements of your plan as outlined in Step 1. ·  Use your narration to provide the supporting rationale for each major bullet point. ·  Include a script of your narration in the notes section of PowerPoint. ·  The final slide must present a clear summary of your major conclusions and any recommendations. ·  Include a reference list in APA formaciting any sources you used to develop your presentation.t TRANSCRIPT It has always been your dream to have your own business. You and your childhood friend Ravi have developed a product called Sunburst that could be used by the growing solar energy industry Tanya, a friend you met through an alumni group, has experience in marketing. The three of you agreed to form the startup team for Sunburst and you gather together one weekday morning to discuss the legal form and organizational structure your business should take. We’re going to need additional investors and expertise to get this business off the ground, Ravi says. We should develop a business plan that will be attractive to potential investors and partners. They’re going to have concerns about joining a new startup, Tanya says. We should work to address these from the start. Ravi looks to you. Can you make PowerPoint presentation for potential investors? Let them know what legal form the business is going to take and explain why it works for our company. You should include your analysis on personal liability, taxes, interests of contributing parties, and management of the business. We want them to know we’ve done our homework. Tanya interrupts, the other thing is we have to decide what organization structure would best serve our goals. That’s right, Ravi says. We’ve already identified innovation and timely customer service as our top priorities for Sunburst. We know we need staff to handle product development, production, finance and accounting, and marketing and sales. We’re definitely going to need human resources functions, Tanya says. Outsourcing is one option we should look into. We need to do some research before we make a decision. Ravi looks to you again. I think we need to develop a clear mission statement and an organization chart and explain the rationale for our decisions in a short paper. PROJECT You go to your office to begin the task at hand—the preparation of a narrated PowerPoint presentation to potential investors that will address all of the issues involved in making this decision. For critical background information, see Creating Sunburst: Legal and Organizational Considerations. You will need this information to make the best legal and organizational decisions for your business. Since one of the investors will not be able to attend a presentation in person, you need to make and record a narrated PowerPoint, so she can listen at her convenience. In order complere this task, you realize that you must do some research to address the legal and strategic implications if your business is to get off the ground. ·   types of business organizations are available to entrepreneurs? ·   are the advantages and disadvantages of each alternative? ·   are the two best choices and why? ·  How would you explain your choices to your investors? Be sure to discuss the following information in your plan (refer to Legal Forms of Business before you begin writing): ·   are the different legal forms of business that you might consider? You remember that there are at least six factors that will influence your choice: ·  creation and maintenance ·  continuity ·  ownership and control ·  personal liability ·  compensation and division of profits ·  taxation ·   is your proposed choice for the legal form of business? Include your reasoning based on the preceding six factors and any other relevant factors. LINKS: Creating Sunburst: Legal and Organizational Consideration — You go to your office to begin the task at hand—the preparation of a narrated PowerPoint presentation to potential investors that will address all of the issues involved in making this decision. For critical background information, see Creating Sunburst: Legal and Organizational Considerations. You will need this information to make the best legal and organizational decisions for your business. Since one of the investors will not be able to attend a presentation in person, you need to make and record a narrated PowerPoint, so she can listen at her convenience. In order to finish strategic implications if your business is to get off the ground. ·   types of business organizations are available to entrepreneurs? ·   are the advantages and disadvantages of each alternative? ·   are the two best choices and why? ·  How would you explain your choices to your investors? Be sure to discuss the following information in your plan (refer to Legal Forms of Business before you begin writing): ·   are the different legal forms of business that you might consider? You remember that there are at least six factors that will influence your choice: ·  creation and maintenance ·  continuity ·  ownership and control ·  personal liability ·  compensation and division of profits ·  taxation ·   is your proposed choice for the legal form of business? Include your reasoning based on the preceding six factors and any other relevant factors. Legal Forms of Business — Business entities are an integral part of business practice and economic productivity. An effective business practitioner must understand the characteristics of the major types of business entities, as these attributes can dramatically affect the nature of the business’s relationships. Before beginning to conduct business, one should always weigh the benefits and burdens of the different types of business entities and make a conscious decision about which type of entity to form to conduct one’s business. Depending on the type of business, the people involved, and the goals of the business, some entities may be more appropriate than others for a particular business. To make the decision about the appropriate type of entity to form, one should consider factors including the following: · —the effort associated with forming and maintaining the entity · —the continuity or stability of the organization upon given occurrences · —the ownership rights and control of those involved with the business · —the potential for personal liability of those involved with the business · —the compensation and division of profits among business owners · —the taxation of the organization’s earnings and its distributions of profits to the owners Weighing these and related factors, which vary in consequence depending on the entity, informs the choice of the type of business entity best suited to one’s business. Examination of these characteristics will make obvious the effect of these attributes on stakeholders of the business entity. The decision of which entity is right for a particular business impacts many facets of a business’s operation, including accounting, management, and finance. are main types of business? (Transcript)– So what are the main types of business entities that we’re going to discuss in this lecture series? Well, okay, the most common form of state recognized business entities are, and I begin with the sole proprietorship. It’s not necessarily an entity, but it is a recognized form of doing business, so it is the default; the backdrop for how every other entity is identified or the characteristics are identified in contrast to how it would be dinged as a, as a sole proprietorship. Okay, so the sole proprietorship, one individual carrying on a commercial activity. A general partnership, that is again, some argue that the general partnership is not a business entity status, but it is commonly recognized as such in most arenas. But again, it’s two or more individuals carrying on a commercial activity for a profit or loss. Then you have your state recognized filed business entities right? That is, you have to file some forms and receive certification of your existence under state law. And to start with, the limited partnership, okay; this is a special form of partnership. You have at least one general partner and at least one limited partner and again, the requirements are you file with the state entity for recognition. Next a limited liability partnership; this is general reserved for professional Practitioners, but it provides for a level of limited personal liability for each of the partners, for liability of actions of the other partners. Okay, so it generally, accounting, engineering, law, medical, design, architecture, those type of firms can only be limited liability partnerships, but the limited liability status of it is also a company by requirement to have some level of professional insurance against malpractice, ok? And then you have, we aren’t going to talk about this in detail, but just know what it is limited liability limited partnership is the special entity form that combines the characteristics of the limited partnership and a general partnership that allows entities to hold assets with personal liability protection, but still have the flexibility and the maneuverability of a partnership. And often used in real-estate transactions, okay, or capital investment transactions and then you have the most common form of business entity, the limited liability company. Okay, and this has unique characteristics of limited personal liability, ease of management structure, but then, you know, some of the other maneuverability and ease of formation advantages of some of the lessor business entities, but it does have to be filed with the state and we’ll talk about that in detail. And then the corporation. The corporation is the oldest form of business entity. It has a very formal structure, which can be streamlined in certain circumstances or situations. It has specific tax characteristics that are unique and has the ability to elect multiple forms of taxation; whether under a C corporation, S corporation and we’ll even introduce a concept of a professional corporation and then you have these requirements for the separation and the ownership structure and the operational structure etc., so we’ll talk about the corporation in detail. Factors for choosing Business Entity. (Transcript) — So what are the factors or considerations that come into play when selecting a business entity? Well, generally, they’re broken down into the costs or effort required for creation of the entity and maintenance of that entity going forward so that’s the first consideration. Second, would be the issues of continuity and how the business lasts and is able to be transferred from individual to individual or generation to generation. Third would be the control of the individual decision makers in the entity, or who are the individual decision makers and who has the capability or possibility of having control in the entity? Next is ownership in the organization. How is the ownership structured and who can be owners? Next is the potential personal liability of the owners for actions of individuals working for or on behalf of the entity that would entail agency, liability or basically at what risk are your personal assets for the activity of the business? Okay, next would be how would the individuals who work in or on behalf of the business compensated? And lastly, what are the tax repercussions of being compensated through the business? So each of these there’s — these individual eight factors we’ll visit them individually for each particular entity kind and discuss them in detail okay. So what are business entities? (Transcript)– Business entities are product of state law. They are state law recognized things that in essence are a bundle of rights, okay? So the state recognizes this legal entity, this status, where individuals can act in concert, in collection, on behalf of this fictitious existence. This entity can own property. Its employees are agents on its behalf. It can have obligations and liabilities. It can in many ways act like a human being, but in essence, what it is, is just this bundle of contractual rights between those who own and represent the business. So the purpose behind it is to allow individuals to be more economically productive. That is, they can bend together and carry on activities, not for themselves, but for this separate fictional thing and they are in essence agents acting on behalf of owners or this fictitious entity and that in some way provides them with benefits. Now the entity status, like I said, is a bundle of contractual rights, so by forming a business entity, by becoming a part owner or owning a business entity with others or by acting on behalf of a business entity as an agent means that you are stepping into a predisposed, a pre-established contractual bundle. That is as a shareholder you have certain rights with regard to the entity and certain duties with regard to the entity. The same goes for the director of a corporation, the member of a LLC, partner in a limited partnership, etc. So the rights and duties are affected based upon the status of the individual with relationship to the business entity itself. So again, states pass their own laws and rules with regard to the rights and duties and obligations of individuals who are associated with the business entity in that way. Now these business entities can carry on activity through their agents within the state and they may carry on activity in other states, but that entity will generally have to register in another state. So the entity will be a state entity in the state in which it forms and which it receives recognition through the state government and then it will register itself with other state governments in order to carry on or do business within that other state. That’s the essence of business entities. It’s a contractually based fictional, fictitious entity whereby individuals associated with it, either its agents, employees or through owners or managers have stepped into this predetermined bundle of rights. SHORT PAPER Now that you have decided on a legal organization form for your business, which currently has a single location, you need to decide on an organization structure. Organization structure determines such things as what departments the organization will need, who will report to whom, how many levels you will have in your organization’s hierarchy, and how many individuals will report to each manager (span of control). An effective structure should promote communication and coordination of efforts across the entire organization. See: Organization Structure and Design. You begin your research by formulating a number of questions, the answers to which will be reflected in a short paper that includes your mission statement, organization chart, and your rationale for these recommendations. Sunburst’s primary goals are innovation and customer responsiveness. How should your mission statement articulate these goals? How can this statement be drafted so that it is clear, concise, and meaningful to organization stakeholders? key tasks must be accomplished in order to meet the organization’s goals? individuals or groups will have responsibility for delivering these processes or items? Will individuals have titles and, if so, which individuals? will those titles be? To whom will individuals report? Why? are the possible impacts of outsourcing the HR function? are the pros and cons of doing so? Make a recommendation in your paper. If you decide to keep HR in house, make sure its place in your business structure is reflected in your organization chart. Consider all other relevant factors (for example, will your business structure be functional, centralized, or decentralized, etc.). When you have formulated your preliminary thoughts and questions, begin your research. The resources below are a good start, but you should also conduct your own research to enhance your knowledge and the final product. When your research is complete, continue to the next step, in which you will write a short paper, which will include a mission statement, organization chart, and summary of the rationale behind your decisions. LINKS: Organizational Structure — The structure of an organization plays a pivotal role in how everyday tasks are handled, in how resources are allocated, in employee supervision and reporting, and in coordination amongst employees. It impacts employee behavior, demeanor, and psyche in ways that are still being studied by theorists today. Organizational structure may play a role in employee motivation and even productivity. A primary factor in creating and managing a new business involves choosing the best organizational structure for it. Some types of business are better suited for a clear hierarchical structure, while others are more apt to work within a flatter organizational structure, with fewer or even no levels of authority. From time to time, a business may reorganize, as online shoe retailer Zappos did when moving from a hierarchy to a flatter “holacracy.” There were reportedly mixed results spurring from this major shift in business structure. As the Zappos case and others reveal, business structure plays an integral role in organizational success. Thus, one should clearly define the initial organizational structure at the outset of starting a new business and monitor it through the business life cycle, tweaking it and shifting it as necessary. : Many if not most of the organizational models in use today have their roots in theories and practices developed at the height of the industrial revolution. As the rate change in the environment increases, these molds are proving themselves inadequate to deal with the demands they are currently facing. This article explores the need for new social technologies and products to replace those that are failing, and the need for these structures to be designed to more natively deal the challenges we face today. The author reviews several of these models with an eye to discussing the attributes that are increasing the effectiveness of modern organizations. : Organizational Design, Management, Innovation Introduction Recently there has been a great deal of attention paid to the structure of organizations, and how often they are poorly designed for their current purpose. With a casual reading of the popular business press, one could argue that many popular theorists have been having a series of Thomas Kuhn moments. Kuhn suggested that paradigms (or models for dealing with reality) are built to account for a specific set of variable and environmental conditions. With time, paradigms often breakdown as the variables or environmental conditions change. They often reach the point where they stop being an effective predictor of how things will work out—or as a tool to organize our response to the environment (Kuhn, 1996). The most popular models of organization structure are broken, or at the very least ill-suited to the current environment. For decades, there have been attempts by innovators to change these models, and these attempts have been meet with significant resistance. Many people continue to process the world with an inadequate paradigm for a number of reasons. Sometimes the resistance has a lot to do with inertia, sometimes we are simply blind to our current level of ineffectiveness, sometimes we may fear change, and sometimes it is simply because we are so invested in the current ideas of how things should work we simply don’t want to let them go. ever the reason, organizational change typically proves difficult. Many of our organizations were built on ideas that were developed for a very different time—with a very different set of performance requirements. Many organizations can trace their current organizational structure to the industrial revolution or soon thereafter. Their current structures were developed in a time when the pace of information, change, and business itself, was much more stable. The workforce was also far less educated and less mobile. This is the environment where Fredrick W. Taylor developed the concept of . Scientific management began by breaking down complex tasks to simple repeatable tasks that could be performed by low-skill, poorly educated workers. Under Taylor’s model there was a very distinct hierarchy. Workers did just that: they worked. They did not think. Thinking was reserved for a limited number of senior managers, and decisions were carried out by a hierarchy of supervisors who reported back on the progress of workers. Actual data collection was fairly limited and data was only shared with managers, many of whom lacked context and knowledge to understand how to best evaluate the data. Taylor’s model works well when the tasks are clear, the environment is highly stable over a long period of time, and the organization can benefit from an economy of scale (Wren, 2004). The problem many organizations face today is that they don’t meet the success criteria for a Taylor model. Our environments are fluid (at best) and can experience dramatic changes on a regular basis (at worst). Therefore, we should shift to organizational designs that can operate in more volatile environments. But the process of shifting often comes with its own challenges. We need to introduce new social technologies, and/or new social products, into the market—technologies and products designed to deal with our current environment and designed to meet the new goals and challenges we face today. When considering how to frame the associated models and rules, we might consider reviewing the successful models and rules for introduction of other types of new products/new technologies that we have used in the past. One thing to keep in mind is that the first generation of a new product often underperforms the incumbent products. Once adopted, the pioneers of the new concept make a number of changes, through trial and error, and several new versions of the new technology or concept begin to appear in the market in short order. The successful versions take hold with innovators and early adopters, but these early adopters often look past the current capabilities of the products and toward a vision of what the future might hold when the paradigm is fully developed (Christensen, 1997; Moore, 2006). Things such as social norms, culture, and technology have huge effects on the potential success of any new organizational model and its ability to move beyond those early adopters. There are patterns of adoption that can be predicted, and many of these predicted patterns can be useful when planning the introduction of a new system. These models—such as the ones developed by Evert Rogers (2003) and Geoffery Moore (2006)—outline how there is often a tipping point. A point where a critical mass of users has adopted the product and an almost viral adoption cycle begins to drive its success. I believe we are nearing that point. In the last couple of decades, we have begun to see a number of new organizational models being used by forward-thinking companies, but we seem to be reaching the point of viral explosion. For the purposes of this article, we will explore several organizational structures that have emerged in recent decades that in some way attempt to deal with the shortcomings of the Taylor models of management and leadership. This is not intended to be a complete taxonomy of modern organizational structures. It is only intended to be a glimpse of some new and creative models, that may managers develop a new perspective on the shortcomings of their own organizational model—as well as a glimpse of what is possible with some creative thought and concerted effort. Lattice Beginning the late 1950s, Gore & Associates developed an organizational structure that was highly team-focused and almost devoid of direct management authority. The structure is based on a flat lattice organization in which teams are self-directed. The self-direction requires each location to begin by developing a list of projects they wished to work on and dividing the work among teams. The teams recruit members to their projects and each team member is expected to spend 10 percent of the time developing a new project of his or her choosing. Even project funding and employee compensation are driven by teams primarily consisting of employees who choose to be on the teams (Harrington, 2003). Over the decades since its founding, Gore has grown to an organization of over 10,000 employees. Through flat lattice organizational structure, and its commitment to keep group sizes under 150 employees, it has been able to maintain a culture of innovation that is rare in organizations of it size and scope. Deutschman (2004) contended the atmosphere at Gore was collegial; there was an energy and excitement about projects, team members were encouraged to contribute, and there was a general conscientiousness that no one wanted to let the team down. Peer pressure and fear of letting the team down supplanted the role of traditional first-line management. In addition to the team culture, the rule that encouraged all research associates spend 10 percent of their time dabbling with new ideas generated some of Gore’s most successful products. Gore was listed among the best places to work in the United States, the United Kingdom, Germany, Italy, and the European Union (A. Deutschman, 2004). Clearly at some level the style translates across cultures. However, there may be concern going forward in regards Gore’s expansion in non-European cultures that do not have a history of open discussion, collaborative team debate, or peer leadership. The Gore approach of self-directed teams may be too much of a cultural shock to Asian cultures, such as China, which has lived under a totalitarian regime for decades. Open Jim Whitehurst (2015), the CEO of Redhat (the open-source software giant), describes his philosophy of organization development and leadership in his recent book . Although some might argue there is not a unique theory within Whitehurst’s book, it does provide a number of clear examples of the implementation of progressive organizational theories. Unlike Gore, Whitehurst does see the need for formal leadership positions in large organizations; however, not in the traditional hierarchical sense. The leadership role is focused not on command and control but rather on building, supporting, and moderating a meritocracy. He believes that organizational success is enabled by high levels of employee engagement. Gallup polls suggest that employees in over 60 percent of organizations today are disengaged and unwilling to make any discretionary effort, and 24 percent are actively disengaged to the level where they are spreading their disengagement to other employees (Crabtree, 2013). Therefore, even moderate buy-in by employees would lead to significant competitive advantage. Whitehurst suggests that you start with a mission: A well-developed and supported mission inspires employees to higher levels of effort and lower levels of turnover. Moreover, if managed properly, a well-developed and supported mission might inspire a community of supporters including customers, contributors, third party developers, and channel partners—the essence of the open-source model. Taking the mission, meritocracy, and community concepts a bit further, Whitehurst believes that employees need to have high levels of discretion within a decision framework. He sees them as members of a community that are driven by a cause—not by a transaction mindset. For the community to work, and the decisions to be sound, there must be extreme levels of transparency—as well as high levels of involvement on key decisions by the community at large. Teal In one of the most popular articles published by Wharton in 2015, Frederic Laloux (2015) suggests that in the 100,000 years of mankind’s anthropological history there have been a number of step changes in how organizations have developed. He has identified five distinct phases of this development. In addition, given the rising level of tension and disillusionment in modern organizations, he believes we are due for another significant step change in the not-too-distant future. This belief is based on the concept that “human societies, like individuals, don’t grow in a linear fashion, but in stages of increasing maturity, consciousness, and complexity” (p. 70). ·  Exhibit 1: Evolutionary Breakthroughs in Human CollaborationColorDescriptionBuilding metaphorKey breakthroughsCurrent examplesRedConstant exercise of power by chief to keep foot soldiers in line. ghly reactive, short-term focus. Thrives in chaotic environments.Wolf packdivision of labor ·  command authority ·  organized crime ·  street gangs ·  tribal militias ·  Amberghly formal roles within a hierarchical pyramid. Top-down command and control. Future is repetition of the past.Armyformal roles (stable and scalable hierarchies) ·  stable, replicable processes (long-term perspectives ·  Catholic church ·  military ·  most government organizations (public school systems, police departments) ·  OrangeGoal is to beat competition; achieve profit and growth. Management by objectives (command and control over what, freedom over how).Machineinnovation ·  accountability ·  meritocracy ·  multinational companies ·  investment banks ·  charter schools ·  GreenFocus on culture and empowerment to boost employee motivation. Stakeholders replace shareholders as primary purposes.Familyempowerment ·  egalitarian management ·  stakeholder model ·  Businesses known for idealistic practices (Ben and Jerry’s, Southwest Airlines, Starbucks, Zappos)TealSelf-management replaces erarchical pyramid. Organizations are seen as living entities, oriented toward realizing their potential.Living organismself-management ·  wholeness ·  evolutionary purpose A few pioneering organizations Source: Frederic Laloux, (Nelson Parker, 2014) Laloux correlates the scale for his steps to the infrared/ultraviolet light spectrum, with red being the oldest structure and teal being the most modern. He recognizes that the Amber organizations and the Taylor structures on his scale are incompatible with the high levels of engagement necessary for knowledge workers to compete effectively; and command and control practices have issues with efficacy as organizations scale. However, we need to step beyond simple empowerment and egalitarianism. “Efforts to make everyone equal often lead to hidden power struggles, dominant actors who co-opt the system, and organizational gridlock” (p. 73). Under Laloux’s model, the more enlightened Teal organizations have several things that would make them distinct from their predecessors: self-management, wholeness, and evolutionary purpose. Laloux is clear that se

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