A Business Management Case Study with ExamplesAbbakin
Abbakin uses business management case studies in preparing its future managers. Therefore learning before doing is much more beneficial to all startups.
Lesson Six: A Business Management Case Study with Examples
Going into a business involves risk, but one of the most important and often overlooked decisions is how to protect yourself and the future of your business, and/or minimize certain risks.
When starting a business, you have many decisions to make, such as:
- who to hire,
- where to locate your business,
- how to get customers,
- how to raise money and
- where to start marketing your products.
In life, teaching and learning precedes practice.
So as a startup entrepreneur or manager, you need to learn before you acquire new skills.
Experience they say is “the best teacher”.
But some experiences do end in pitfalls.
“Uncertainty can’t be good for business” said Bill Gates, the owner and founder of Microsoft.
In large extent, the best ownership structure for your business depends on the type of services or products it will provide.
Such is the Business Management Case in this article.
If your business will engage in risky activities — like trading stocks, or roofing contracts — you’ll surely need to form a business organization that provides protection against personal liability.
This will shields your personal assets from business debts and legal claims.
Business management case method is capable of impacting skills which will help you identify and analyze management issues that are very near to the real life situations.
Theses management issues which future entrepreneurs and managers are likely to encounter in their lives or business careers are better prevented using near life scenarios.
Below is the business management case study of a startup entrepreneur name Mike.
A Business Management Case Study with Examples
THE MIKE’S STORY
Mike was a young man who received a sizeable inheritance and has decided to start a taxicab company in the City of Lagos, Nigeria.
Although the competition was fierce, after a couple of years Mike business has grown up to seven taxis in his fleet and the money was rolling in.
Then one day, one of his drivers calls him from the road – he was involved in an accident!
According to his report, Mike learned that the new driver he hired was not paying attention and he seriously injured a man crossing the street.
On assessing the situation, Mike fired the driver and sent his condolences to the man in the hospital.
He also went so far as to offer to pay his hospital bills, yet the victim wasn’t consoled by his efforts.
Two weeks later, Mike was served with a lawsuit, because the man can never walk again.
During the case, Mike hired some lawyers who concluded to settle the case out of court.
The sum decided was vast, but Mike didn’t have any choice.
This was so because Mike had not formed a Corporation or Limited Liability Company.
Not only did the judgment force him to liquidate his entire business, but he also had to sell his home and give up a substantial amount of his children’s’ school fees.
Mike was devastated – especially when he learned that had it been he formed a Limited Liability Company (LLC); only the business would have been lost and his home and family’s financial future would have remained intact.
He was also surprised to further learned that had he placed each vehicle under comprehensive insurance poly; even the car that hit the victim would have been covered and he (Mike) would still have his business and six other cars in his fleet.
What are the lessons in this Business Management Case Study?
As you can see, this case indeed provides a real-world scenario that demonstrates how business structures work for different types of companies or industries.
Business owners therefore have to pick the structure that best meets their investment needs.
Normally, many businesses start out as sole operations, or partnerships. However, your initial choice of a business structure is not sited in stone!
Much sole proprietorship businesses often evolve into some other form of businesses – like a partnership or LLC.
So as the company grows, the needs of the owner changes, and/or the risks of personal liability also increase.
A once sole proprietorship or partnership can be converted to a Limited Liability Company or Public Company and vice versa, as this is permissible by law.
For businesses that will never “go public,” forming a public company probably is not worth the added expense.
Instead, the simplicity and flexibility of LLCs offers a more clear advantage.
Until your company is incorporated, or your sole proprietorship or partnership is registered; you should not invest any money on the name, for example, web address, printing, advertising.
This is because the name may be changed at any time.
The name of a business is only on reserve and can be changed prior to incorporation or registration.
Read the part two of this course: Business Organization 201.
Here, every aspect of company incorporation, trademarks, business contracts and partnership agreements are well covered.
Congratulations as you have come to the end of this course: Understanding Business Organizational Structure
So far, we have discovered how to name your business; the best type of business organization to choose; and how to go about registering your professional businesses, especially in Nigeria.
Including requirements for the federal and state laws; tax related issues and the Nigerian business permits.
Please review each section successfully. This will help you analyze and contribute your own solution to the key problems presented in these lessons.
Remember to drop your own comments – so that others can learn from you too.
If you have any question or require additional clarifications or materials, then get it touch with us here.