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An essential step in starting a new business is creating a business plan. It describes the location and the items that a company will provide to its clients. Additionally, the business plan is crucial for outlining the type of business that will be adopted by the company once operations begin. The legal procedures that will be followed to establish the business are also described in the business plan. The agreement also includes the moral and social issues that the new company must take into account. In essence, this business plan will describe the aforementioned elements in respect to XYZ, a brand-new company that will be organized as a partnership. The plan includes aspects such as a partnership agreement, a supplier contract, ethical and social considerations and possible disagreements and how they can be resolved.
The name of the new business will be “XYZ Electrical Cables and Accessories Limited’’. The company will be based in Texas with aims of expanding it to other states in future. The company will offer products such as power cables, coaxial cables and computer cables among others. Identification of the target market is important because it will the company develop an effective marketing strategy. Moreover, the target market will enable the company satisfy the needs of the customers (Ferrell & Pride, 2010). The target market for “XYZ Electrical Cables and Accessories” is customers between the ages of 25-45 years. These customers are based in Texas and its environs. The rationale for targeting these consumers is that they form a significant part of the population. The target market will consist mainly of people in the middle class. Additionally, this target market are active members of the economy since it is at this age that people build their homesteads and will need the electrical cables and accessories to do wiring in their houses. The company will also target real estate investors and the government to supplement on its primary target market. It is important to note that the business will be owned by four family members.
Description of Type of Business
The most ideal business form for the new business will be partnership. This is a voluntary association of two or more persons to acts as co-owners of a business for profit. The business will be made up of four partners who will be general and limited partners. General partners will assume full responsibility of operating the business while limited partners will only invest their finances, but will have no part in the management of the business. A partnership agreement will be drafted at a later date when the partners meet. The agreement will outline the responsibilities of each partner, the amount of investment made by each partner, profit sharing ratio, and how the partnership will be dissolved.
The choice of the form of partnership is based on the following advantages. Firstly, the partnership is easy to set up due to minimal legal requirement. Secondly, raising capital is also easy since each partner makes a contribution. The personal interest which is as a result of ownership is also a major advantage for the business. Additionally, the combined business skills of the owners give them a competitive advantage. Besides, there are no special taxes for partnership businesses (Pride, Hughes, &Kapoor, 2016). In general, these advantages will make the new business a reality and a success that will grow and expand in future.
The agreement made on March 7, 2017, between Xavier, Yvette, Zach, and Zaneta all of address 500 5th Ave Ste 400 New York, NY.
The above named persons have on this date formed a partnership that will operate under the name XYZ Electrical Cables and Accessories.
The duration of the partnership will be ten years, and each partner will make an initial investment in the ratio 0.4:0.3:0.2:0.1 respectively in the order of their names in this agreement.
Xavier and Yvette will be responsible for running the partnership daily activities while Zach and Zanette will be limited partners.
Profits will be shared in accordance to the ratio of investment of each partner.
Admission of new partners will have to be approved by all the partners.
Xavier and Yvette will be entitled to an annual salary of $40,000.
The partnership may be dissolved upon realization to objectives or the death of one partner. Each partner shall receive proceeds from the sale of the business in the ratio of initial investment.
Xavier ___________Yvette__________ Zach______________ Zanette __________
Steps in Forming Partnerships
There are no formal steps that are followed when forming partnership. However, it is important to ensure that legal steps are followed so as to avoid drawbacks in future. The first step in forming a partnership is the identification of the members of the business. In the case of the new business, partnership will be made up of two men and two women members. The next step in forming the partnership is to determine the products that the business will be dealing with; which in the case of the new business will be electrical products. At the same time, the name of the partnership will also be determined. Additionally, the next step will be to determine the classification of each partner either general or limited. A formal partnership agreement capturing all these aspects will then be drafted so that it can be approved by the members (Clarkson, Miller, & Cross, 2010). Each partner will then be required to sign the partnership agreement in the presence of an attorney. It is important that a partnership agreement contains a section that states what process should be followed when a partner wants to either dissolve or one dies (Pride et al., 2016).In general, a partnership does not have significant legal obstacles to its formation such as in the case of companies.
Contract between XYZ and PQR Limited for the Supply of Goods
This agreement is between XYZ (purchaser) and PQR limited (supplier) for the supply of electrical products, and it shall be governed by the federal law of the United States.
The purchaser shall provide reasonable notification to the supplier for the delivery of the goods. Moreover, the purchaser will be expected to pay for goods within the credit period agreed with the supplier. The role of the supplier will be to ensure of products as ordered by the purchaser.
Packaging and Quality
All the goods delivered must be of quality with no possible defects. The supplier will be responsible for ensuring that the goods are packaged properly. Defective goods will be returned to the supplier who will be expected to replace them at their own cost.
The supplier shall be expected to warrant that the goods delivered are free of any defects for a period of one year.
Under no circumstances will the supplier subcontract the delivery of goods to another party that is not part of this agreement.
The supplier and purchaser may terminate the contract at any time if one of them fails to meet their end of the agreement. This includes cases such as late delivery of goods, payment is not made, or defective goods are delivered.
Price and Payment
The supplier and purchaser will agree on the price of each item before delivery. Payment will be made within thirty days upon delivery of the goods. The price may be adjusted in case of tax increase or inflation.
Purchaser: _______________ ________________
Supplier: __________________ _________________
Ethics and Social Responsibility
Corporations have ethical responsibilities, XYZ Electrical Cables and Accessories, as a corporation has ethical responsibilities too. The firm will establish various forms of conduct that every member of the organization will follow. Firstly every component of the firm will have to acquire a basic understanding of the integrity issues ranging from how business affairs should be handled to a vow of treating customers fairly. Additionally, XYZ Electrical Cables and Accessories shall pay great attention to issues of diversity. The company shall utilize a recruiting strategy that develops a diverse workforce while promoting equal opportunity in every training program. Further, the workers will be able to enjoy a chance of respectful setting that acknowledges their contributions. Further, ethical decision making shall be an integral part of the company’s considerations (Ferrell & Fraedrich, 2015)). Consequently, ethical decision making shall encourage the protection of employee and customer rights while ensuring that all operations are conducted in a fair manner.
XYZ Electrical Cables and Accessories have shareholders that require a reasonable return on all their investments. Therefore, the business will consider its economic responsibility and function properly and stay in business. Additionally, XYZ Electrical Cables and Accessories \ has the responsibility to abide by the provisions of the law thus playing by the rules of the game. For the company to be socially responsible, all legal responsibilities should be met. Further, the ethical responsibility compels XYZ Electrical Cables and Accessories to do what is right, fair, and what we may not be obliged by the legal framework, as such, the company should struggle to offer quality services and products that are functional (Choi, Ullah, &Kwak, 2015). Therefore, the firm’s ethical considerations shall include what is generally expected by the society over and above economic and legal expectations. Additionally, the firm has philanthropic responsibilities. This aspect of corporate social responsibility is keen to address many issues including charitable donations support for the local schools, constructing recreational facilities for the workers and their families, as well as sponsoring sport and art events. In general, these social responsibility programs will be aimed at making the lives of the employees and the community better.
Disagreements in partnerships businesses are common, but with the guidance of the partnership agreement, the conflicts can be resolved. Some of the common disagreements that may arise include conflicts on how profits are supposed to be shared, and the fact that one partner may want to dissolve the business. In the case of XYZ however, a possible disagreement in future may be the admission of new members since it is a family enterprise. In future, the four partners may have children who they want to bring into the business. However, this may result to problems such as the clash of responsibilities among the current partners; profit-sharing ratio will also become a problem. The other problem is that one of the partners who have not admitted their children may want to dissolve the partnership as they feel that their interests are not served by the business. In essence, the primary problem in this case is the admission of new members into the partnership.
Resolving the Conflict
The conflict will be resolved by the partners together with their attorney by referring back to the partnership agreement that each of them signed. Firstly, the partnership agreement states that the admission of new members will have to be approved by each partner. In the case of XYZ, if all the partners did not approve of their children joining the business, then the membership of the children will be null. Secondly, the agreement clearly states the members who will be entitled to a salary hence the children of the partners do not have any right to claim a salary from the business. Furthermore, the agreement also states on the way the profits of the business will be shared among the partners, and this does not include their children. In essence, the possible disagreement can be resolved among the partners to ensure that their children are admitted legally. If in any case the children have to join the partnership, a formal process has to be followed which will ensure that conflicts are avoided.
Choi, S. B., Ullah, S. M., & Kwak, W. J. (2015). Ethical leadership and followers' attitudes toward corporate social responsibility: The role of perceived ethical work climate. Social Behavior and Personality: an international journal, 43(3), 353-365.
Clarkson, K. W., Miller, R. L., & Cross, F. B. (2010). Business law: text and cases: legal, ethical, global, and corporate environment. Cengage Learning.
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.
Ferrell, O. C., & Pride, W. M. (2010). Foundations of marketing. South-Western College/West, 4th edition: Mason.
Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2016). Foundations of business. Cengage Learning.
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