TRUE FORM: MINI

CASE STUDIES —ANSWER GUIDE

1. As a young child, Karina had a passion for animals and environmental issues. After she
graduated from college, Karina landed a job in an organization whose mission is to create
public awareness about endangered animals and other environmental issues. Karina’s
employer
depends largely on grants and donations to fund business activities. (Nonprofit)
2. Kyle and Palo had been friends for a long time. The friends shared a common interest in
computer technology. Kyle had done some software design and computer work on his own
for neighbors and family friends. It wasn’t long before he realized that there was a demand
for small businesses to have affordable computer consultants. He decided to start a business.
Kyle discussed his venture with Palo and asked him if he would like to combine capital and
take an active role in the business with him. Both Kyle and Palo are equally responsible for
the businesses’ risks and rewards. (General partnership)
3. Rachel worked in one of her family’s two furniture stores. When her grandfather decided to
expand the business and build three more stores, Rachel realized that he would need a lot of
capital to get the construction started. She suggested that her grandfather raise the money by
selling shares of stock in the company to just a few people, not to the general public. Her
grandfather filed Articles of Incorporation with the government. He sold 1,000 shares of stock
to 100 people and kept 1,500 shares. (Close/private corporation)
4. Doug grew up on a large farm in southwest Wisconsin. As a college graduation gift, Doug’s
father gave him several hundred acres of land to raise organic soybeans, grain, and corn. Doug
works the fields by himself, negotiates deals with buyers, repairs equipment, and handles all
the accounting and financial issues for the business, which is called The Natural Element.
(Sole proprietorship)
5. Shawna, Maya, and Andre’s interior design business was taking off in a big way. Their talent
was in high demand. It wasn’t long before the trio needed to hire more employees. Since the
needs of their company were changing, they reviewed their personal circumstances, finances,
and goals. They decided to legally organize the company so it had a limited life as well as
limited liability. (Limited liability company/LLC)
6. Ming was an associate orthodontist in a large dental practice. While attending a professional
seminar, Ming ran into a former colleague, Kevin. He told Ming that he and five others were
planning to open their own dental practice. They were looking for an orthodontist to include
in their practice. Within three months, six members of the dental practice filed the necessary
paperwork and paid annual fees to the government to start their new dental practice. Before
they open for business, they will have to make sure that each member has sufficient
malpractice insurance. (Limited liability partnership/LLP)
7. Chip and Charlie own a local pizza shop. The pizza was the talk of the neighborhood. When
customers suggested that they open more stores, Chip and Charlie were hesitant. They didn’t
have the money. Chip and Charlie went ahead with plans to open another shop across town.
To finance the venture, the partners formed a private corporation and sold shares of stock to
friends. They chose a legal arrangement that allowed them to avoid dual taxation.
(“S” corporation)
 TRUE FORM: MINI
CASE STUDIES —ANSWER GUIDE (cont’d)

8. James owns part of a business. He purchased several hundred shares of stock in a large,
nationally recognized steel company. Several thousand other people own stock in the
company too. Each year, all the shareholders receive a detailed report about the financial
activities of the company. (“C” corporation)
9. For years, Andrew worked for a national airline as a pilot. When the stress got to him, he
decided to simplify his life. He packed his bags and moved to Key West. Andrew decided to
start his own transportation and touring service for travelers. To accomplish his goal, he
needed to purchase a small commuter plane. He only had one problem—money. Andrew
telephoned his very wealthy uncle in Seattle to see if he would like a piece of the action.
Andrew proposed that he would run the day-to-day activities of the company, while his uncle
would just provide a percentage of the capital. His uncle agreed, and Andrew contacted an
attorney to develop a written agreement. (Limited partnership)
10. Abby attended a party at a friend’s house. At the party, a sales representative presented a
line of high quality, decorative baskets in an array of shapes and sizes. Abby has been a
collector of the baskets for a long time. When the sales representative approached her about
becoming a representative for the company, Abby told the representative that she would be
very interested in becoming a distributor. (Multi-level marketing)
11. Jake loves science, particularly chemistry. While experimenting with a chemical combination
for a school science fair project, he discovered that the concoction removed stains from
virtually any fabric or fiber—from carpets to delicate linens. He knew that he had stumbled
onto a great invention. He filed paperwork to get the product patented. He didn’t have the
capital, equipment, or time to make the product, so he sold a manufacturer the right to
produce and distribute the product. The manufacturer paid Jake a percentage of the annual
profits.
(Licensing)
12. Annette started working as a repairperson in a local appliance store when she was in school.
She loved the work and was promoted to service manager within a few years. Annette had
always wanted to own her own business, and she started to research ways to achieve her
goals. The next year, Annette opened her own store, Annette’s Appliance and Repair Shop.
Her store is a distributor for Whirlpool washers and dryers. (Product trade-name franchise)
13. Gina loves food almost as much as she likes to make money. When Gina knew that she
wanted to own her own business, she decided to open a restaurant. She didn’t know exactly
what was involved and wanted some guidance as she developed her business. She contacted
a nationally known restaurant chain and purchased the right to operate her restaurant under
the restaurant’s trade name. (Business-format franchise)
14. As a successful businessperson, Ben wanted to take the next step to expand his mid-size
company internationally. He knew he didn’t have enough capital and know-how to get into
foreign markets. He contacted a former business associate who owned a garment
manufacturing company in Australia. Together, they worked out a deal that would benefit
both of their companies in a relationship that would last no longer than one year. (Joint
venture)
 TRUE FORM: MINI
CASE STUDIES —ANSWER GUIDE (cont’d)

15. Tom purchased franchise rights to open a Maggie Moos ice-cream shop. Since this was his
first business ownership venture, he decided to take advantage of the business proposition
that a local merchant offered. The merchant owned a discount store in the center of town
and asked Tom if he would like to open his business in the discount store. The arrangement
proved beneficial to both Tom and the store owner. (Piggyback franchise)