1,500 maximum word limit total for all parts (worth 25 points)
Aahlaadita (means “One who is in a happy mood” in Hindi) Abramovich is 46 years old and she was born and raised in Lincoln City, Oregon USA. She joined the US military after she graduated with her undergraduate degree from Mount Holyoke college in Massachusetts when she was 22 years old. She served 21 years in the United States Air
5) You must address all questions. Your answers should be limited to the number of words indicated for each question. Failure to adhere to length parameters for each question will result in deduction of points. There is a stated maximum word count for each of the questions (Question 1 = 1,500 words maximum, Question 2 = 1,000 words maximum, Question 3 = 750 words maximum and Question 4 = 500 words maximum). Some of the subsections also have additional stated maximum word limits (e.g., 100 words maximum). If a subsection does not have a stated word maximum, it is your discretion to use a word count that you feel sufficiently answers the question while continuing to adhere to the overall maximum word limits for each question. It is advisable to use the word count feature to check your word counts.
6) Point Allocation: 80% of your grade will be based on the quality of the content of your responses to the questions. The points allocated to each question are indicated. In addition, 20% of your grade will be based on the quality of your attention to graduate level grammar, organization, punctuation, usage, spelling, and APA citation requirements.
CONTENT - 80 points
FORM - 20 points (Graduate level structure, grammar, spelling, punctuation, word usage and adherence to APA citation style)
------------------------------------------------------------------------------------------------------------------------- SUMMARY - Do not post a separate document for each question. Use the provided Student Exam Answer Sheet. Include your responses to all questions in the column, “Your Response” next to the appropriate question. Your Answer Sheet includes ONE reference list at the end of the document with all of the references you used in your responses. The reference list is required but will not count toward the allowed number of words. In addition to the reference list, you also should cite sources within your text where appropriate.
This entire exam is fictional. Any references to any real entities or events are only creative illustrations integrated into imaginary case patterns to provide educational context and concept application to this fictional business exam.
END OF INSTRUCTIONS
Force and retired as a Lieutenant Colonel three years ago. While serving on active duty, she earned two graduate degrees (one was an MBA from UMUC).
Aahlaadita currently earns a little over $4,000 USD per month in her military retirement pay. She wanted to “follow her passion” when she left active duty service. Yet, she is a cautious person and risk adverse. So, after she retired she took a full time job with a US federal government agency in the Dallas, Texas region at the GS-14 level (this is the General Schedule pay grade that the US federal government uses for the majority of their employees). Aahlaadita currently earns $105,500 USD annually in this job. Thus, her monthly gross income (full time job and retirement pay) is right around $13,000 per month.
She has always been very prudent with her money and saved as much as she could each month.
In fact, in addition to her $13,000 monthly income, Aahlaadita has $1,200,000.00 USD saved and invested in a diverse portfolio of stocks and bonds. She has also been a long term real estate investor and currently has 12 rental properties (single family homes and duplexes) around the US that are fully paid for and in total generate $12,000 per month in positive cash flow. Her retirement pay, full time job income, and rental property income total $25,000 a month.
She has no debt (the house she lives in she paid cash for when she purchased it). She says, “I am ‘set for life’ financially at this point so why not have a little fun and potentially ‘get rich’ going into business?”
Aahlaadita has a great standard of living and enjoys vacations, personal services (spa treatments, maids, dog sitters, etc.) and has the freedom to do what she wants, when she wants. She does have two dogs, a turtle and a fish tank full of exotic fish that she dotes on.
Aahlaadita says that once she gets her assets over ten million USD she will finally feel financially secure (including her properties her current total assets are over four million USD). She has noticed how many of her real estate investor friends have private planes and she does not have one. Her business role model, Oprah Winfrey, said as the Duke University commencement speaker in 2009, “it is really fantastic to have your own jet, and anybody who says it isn’t is lying to you. That jet thing is really good.” (Leonard, 2009)
At 46 years old, she is not a teenager but she is also not quite ready for the retirement home and playing golf all day. She still has dreams.
Aahlaadita is the cousin of your friend from undergraduate school. Your friend asks you to help Aahlaadita. As you are an expert about business (due to being in the DMBA degree program), you agree to help.
Aahlaadita sets up a Skype session with you so that you are able to see her while you speak to each other. Aahlaadita tells you that she plans to name her business, “FitFido!”
Aahlaadita has a few business concerns. She tells you that she knows that she has several multimillion dollar ideas and she must protect them from “thieves and haters.”
Aahlaadita tells you that she does not need any “expensive lawyer” as she has multiple degrees and is a retired Air Force officer. She has already found several websites she is going to use such as LegalZoom, Rocket Lawyer, Nolo and MyCorporation.com for starting her business. She states that she also knows that it is not easy for a startup business to survive.
So, you locate the Custom Text from DMBA 610 and tell her that the two of you should go through the comparison chart on pp. 766 and come up with your “best” and “second best” forms from a business perspective (before her going to one of the online websites to file forms to start the business).
Note the following issues as you evaluate the comparison chart in your custom text:
1. Aahlaadita’s business is “not fully fleshed out” at this time. She envisions “FitFido!” as an exercise and fitness “immersion experience” for “pet babies.” She explains to you that the business is still in “the creative, iterative process” but will be “a multi-platform integrative firm utilizing technology, Neuro-Linguistic Programming (NLP) and ‘groundbreaking’ animal phobia research in pursuit of the optimal state of mammalian nutrition.” She tells you that the majority of the business investors will be sourced via crowdfunding (specifically, she will use the sites https://www.kickstarter.com/, https://www.indiegogo.com/ and https://www.fundable.com/). She says that she read that even bizarre business ideas get crowdfunding and that she is confident she will raise “any amount of money that she wants” (https://www.americanexpress.com/us/small-business/openforum/articles/8-really-bizarre-business-ideas-that-got-crowdfunding/).
2. The only business investor that will not sourced via crowdfunding is an old childhood friend from Lincoln City, Oregon, Adele LaToya Jolie-Pitt. Ms. Jolie-Pitt recently contacted Aahlaadita on Facebook and they caught up with a long phone call. Adele was super excited about an opportunity to invest in an amazing business. Adele LaToya Jolie-Pitt and is 42 years old. She holds a PhD in Management from MIT Sloan School of Management but is currently unemployed.
Adele LaToya Jolie-Pitt will invest only $10 at this time and demands limited liability. She had a Ch. 7 bankruptcy that she filed 24 months ago so she has no personal credit and no access to, or ability to obtain, credit for the new business. She also has no income, no pension, no savings, and has a net worth of approximately negative (-)$220,000 USD due to outstanding student loans from her PhD. Adele
LaToya does not work and said that she will be “dedicated full time to making money” for the new business. She has stated that she will need to draw a salary from the new business immediately (she has suggested $8,000 USD per month).
3. Aahlaadita had not checked into the business name “FitFido!” (other than to share that it came to her in a dream) but you did a quick Google search and located a business in the USA in Massachusetts named “The Fit Fido” (http://www.thefitfido.com) and another business in Australia, named “Fit Fido” (http://www.fitfido.com.au/).
4. Aahlaadita is very cautious and she wants to ensure she has no liability for the business (or limited liability in the alternative). She says that she was childhood best friends with Adele LaToya and she feels that she “owes” her to go into business together. Yet, Aahlaadita tells you that she “does not trust” Adele LaToya Jolie-Pitt or anyone else with “her” money. She does not want Adele LaToya or anyone else to be able to sign any business checks, use any business credit cards, access any business funds or make any business financial decisions. She tells you that she wants a maximum cap on how much money she could personally lose if the new business fails (of no more than $120,000 or approximately 10% of her liquid assets at the present time). Aahlaadita will be working for the business when she can, but this is a “side business” for her as she has her full time federal government job in the Dallas, Texas area.
5. Aahlaadita is a U.S. citizen. Adele LaToya Jolie-Pitt is a US permanent resident (green card holder). You do not yet know the citizenship status of Aahlaadita’s crowdfunding investors.
QUESTIONS TO ANSWER (each one is labeled on your Answer Sheet as 1A, 1B, 1C, 1D)
Prepare your response for Aahlaadita. Support each item with principles and theories from the readings: A) What are the primary considerations for the entrepreneur in choice of a legal form? (100 word limit)
B) What are the advantages and disadvantages of each form in terms of the specific constraints and objectives?
C) Which one form would you choose and why? Which form would be your “second-best” recommendation and why?
D) Why is it valuable to have a legally astute management team making the decision about the choice of business entity, rather than leaving these decisions to the lawyers?
(Maximum Limit: 1500 words total for all parts).