Mgta 05 - Provide an Example of a Country, or a Period of Time, When Planned Economics Was an Effective or Appropriate Way to Organise a Country’s Economy?

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While most people’s personalities involve a mix, some people exhibit a strong bias to one of them. The mix of motivational needs will affect an individual's personality, behaviour, life- and career-choices. The characteristics of each personality type are as follows:

Need for power (nPow): Some people are motivated by power. They like to have authority and they need to be influential. nPow produces a need to lead. People with a high need for power will choose careers that offer status and prestige. They will be attracted to be senior managers in a large corporation, senior officers in the military or security organisations, or politicians. In these types of jobs they can command great resources, and wield a great deal of influence.

Need for affiliation (nAff): Some people need to have friendly relationships. They are motivated by interaction with others. nAff produces the need to be liked and held in good regard. People with this motivation will choose careers that involve working with others and being team players. They will choose jobs that involve helping or caring. Individuals with a high nAff might work as teachers, health care workers (doctors and nurses), social workers, coaches, religious leaders, or business related jobs that involve working in teams.

Need for achievement (nAch): Some people are motivated by a sense of personal achievement. These people like to set, and attain, challenging goals for themselves. nAch produces people who need to accomplish tasks. People with this type of motivation will choose careers that involve personal achievement, or mastering a task or situation. They might become athletes, intellectuals and scholars, or entrepreneurs and business owners.

Practice Question 4 - from Chapter 8 5 marks

Henry is 55 years old and has recently been laid off. He worked as a chemist for many years with a large chemical corporation that has been hit hard by the recession. Henry is looking around for work. A former client comes to Henry and asks if he would be willing to bid on a contract to supply windshield washer fluid to a large fleet of rental vehicles. Henry has a good friend who runs a small business that manufactures the key ingredient in washer fluid. They agree that they could form a new business to bid on the contract to manufacture and supply the windshield washer fluid. Henry is thinking of retiring in 5 to 10 years. His son David is a recent UTSC graduate in Management and would like to be involved in the business. Henry would be glad to see David take over Henry’s interest in the business when Henry retires. What are the legal forms of organization that Henry could employ to bid on the contract? Which should he choose? Explain and justify your answer.

Purpose of this Question

The purpose of question is to test your knowledge of the advantages, disadvantages, costs and benefits of various forms of business organisation.

Model Answer and Marking Guide

Henry’s options are probably either to form a corporation, or to form a general partnership. A sole proprietorship is out of the question since two or more people, by definition would be involved in owning and operating the business. Award one mark for each of the two likely options.

The advantage of a partnership is that Henry and his friend could get together as general partners relatively quickly and easily. In the simplest case, they could merely come to a verbal understanding

More probably they would want to have a partnership agreement, spelling out their respective responsibilities and commitments as well as the division of the profits. Since Henry and his future partner are old friends, they will want to anticipate and avoid any misunderstandings or breakdowns in communication.

There is a risk to establishing the business as a partnership. That risk is, of course, the risk of personal liability. Henry is manufacturing a chemical product. If anything goes wrong, the business (and he personally) may be sued.

Up to 2 marks for quality of discussion, demonstration of advantages/disadvantages and key issues of creating a partnership. Key words: partnership agreement, risk, lawsuit, personal liability

The other key issue is Henry’s desire to pass on the business to his son, David. This suggests that corporation is the most sensible way to go.

If the business is incorporated, Henry can sell or transfer his shares in the business to David when he decides to retire. Selling or transferring shares in a corporation is probably a more straight forward matter than trying to anticipate ownership transfer in a partnership.

Up to 2 marks for quality of discussion, demonstration of advantages/disadvantages and key issues of creating a corporation. Key words: transfer of ownership, limited liability