INDIVIDUAL BUSINESS CASE IN ACTPACO (ACCTBA2) FIRST HALF COURSE REQUIREMENT Scenario Description: Jonas Goldberg and Rande

Gedaliah, lifelong friends, went into business together to establish The Living Room, a caf bookstore. Lately, Jonas has not been doing his fair share of the work and has been unreliable, shrinking many of his important duties. Rande has reached the point of confronting Jonas and wants to take immediate action to resolve this situation. Profile: Jonas Goldberg co-founded The Living Room. As co-owner and manager, Jonas oversees all bookstore needs and manages the caf and community events portion of the business with his partner and long-time friends, Rande Gedaliah. Rande Gedaliah is a Partner, Manager and Co-owner of The Living Room, a caf and bookstore with an active community center and bakery. She is solely responsible for overseeing the bakery, which distributes to local restaurants and stores. In addition, she also manages the caf and its community events along with her partner. History: The Living Room is a small business located in the Boston Suburbs. The business is a new spin on the caf bookstore, with the additions of an active community center and bakery with distribution to local restaurants/stores. Jonas is a freelance writer and stay at home Dad with three young children. His wife is a District Attorney. He was looking for a side venture as well as supplemental income. Rande is a divorced mother of two young schoolboys and a successful sculptor who needed income with a schedule she could control. Rande is very levelheaded and generally calm, as long as all the balls shes juggling stay in the air. Rande and Jonas opened The Living Room two years ago and have recently expanded the hours/customer flow drastically in an attempt to finally make a decent income. They split most of the business duties, share the larger tasks, and each spend a certain number of hours in the caf supervising they are 50-50 partners. They have known each other for years (their parents are family-friends) and have had a generally smooth relationship. Jonas and Rande had agreed completely about increasing business hours so drastically about two months ago. But Jonas did not anticipate the impact this would have on his life and is struggling to deal with it. In the past six weeks Jonas has cancelled meetings last minute, missed the Tax Accountant meeting altogether, forgot to do employees weekly payroll twice, and has not brought in a single community event for the month (both are responsible for booking at least three lucrative events/month). Meanwhile the change in hours is exhausting Rande and Jonas unreliability is totally stressing her out. Scene Set-up: After calling Jonas three times to remind him, Rande and Jonas are finally meeting to discuss Randes dissatisfaction with Jonas contribution to the company. The Meeting: Rande indicates to Jonas that the distribution of the workload and his repeatedly missing meetings and other major responsibilities (e.g., payroll) is not acceptable. Jonas understands this but contends he is doing the best he can and is still contributing significantly to the business. Rande asks him what can be done to improve this situation. Jonas cuts the meeting off because he has to pick up his daughter. Rande tries to pin him down on another meeting time which he halfheartedly agrees to. Six days later, Rande finally meets with Jonas again and asks him what solutions he came up with. He says hed like to bow out gracefully but wants to reserve the right to sell his share to whomever he wants in order to make the most money. Rande seems relieved at his decision but explains that she has the right of refusal and that she has already discussed their partnership agreement with their lawyer. They agree to meet with the lawyer the following Monday.

Afterthoughts: Rande is shocked at Jonas expectation that he could sell his share of the business to anyone he wants. She feels the interaction went very poorly and is saddened that he didnt seem to make their friendship or the success of the business a priority in his life. She feels he never truly appreciated the impact of his actions on their business or friendship. She notes the difficulty of going into business with a friend. Questions: 1. What unique challenges did Rande and Jonas face when entering into this partnership?

Before entering into any kind of partnership, the partners must take into account not only the capital or industry that they can put in the business but also the circumstances that they have, their managing capabilities, and their own personality so that they could better lead their business. Jonas, being a stay at home dad and a freelance writer at the same time, has his hands full almost all the time. This shouldve been taken into consideration before making him the managing partner of their business. With their business expanding, I personally think that Jonas time constraint would be a big limitation for him to be extremely hands on in their business. Him being a stay at home dad where he has to take care of his three kids is also a challenge for running the business.

In Randes part, being a single parent and a successful sculptor, one can assume that she strictly sticks to a rigid and organized schedule to manage her life. Being a working mom, she shouldve been more considerate of Jonas nevertheless, being a comanaging partner of the business, she has the right to reprimand her partner for the nonfulfillment of his task.

In entering into this kind of business, their relationship as long-time friends is being jeopardized due to the challenges that they have faced. First, the management of their business has been compromised. Second, based from the given information, Jonas seems to be reluctant, and incompetent in running the business. Third, when Jonas decided to bow out, deciding who to sell his shares to was quite a letdown for Rande as this wouldve made her a sole proprietor of the business if ever she buys out Jonas, or might drive the business down if ever he chooses an incompetent partner.

2. What type of conflict is depicted in this situation? situation?

How did Rande handle the

Personally, I think that it is more of a personal conflict between the partners which, in return, may affect how the business is ran in the long haul. I am pretty impressed by how Rande handled the situation by resorting to more rational means than by simply acting on it impulsively. When she decided to talk to Jonas in a formal, and an I-mean-business way of conversing, she was able to comprehend the consequences that follow it.
3. What impact did their friendship seem to have on the partnership?

A lot of their friendship was at stake during that time. The challenges that accompanied the partnership made it almost impossible for both of them not to bask in arguments. Their friendship was almost jeopardized although it was also their friendship that made them come together, and it also taught them the value of cooperation.
4. What partner duties did Jonas fail to perform?

Jonas failed to perform his obligation to the partnership. His duty was to be the managing partner of Rande. Being the managing partner, his share in the partnership was to oversee all bookstore needs, manage the caf, and contribute at least three profitable events per month. With Jonas, he failed to attend important meetings, and the Tax Accountant meetings. He also forgot to do the workers weekly payroll. He was very inconsistent with his managerial duties as a partner of Rande.
5. What can they do to resolve their problem?

In my opinion, Jonas should not easily give up on the business especially since they have gone a long way since their startup days. He should be more optimistic, and must take responsibility more seriously. Rande must be more considerate as to the situation of Jonas being a stay at home dad, and a freelance writer. He probably has his hands full and deciding to increase business hours would mean that Jonas has to give up more of his time for taking care of his kids for the business. To resolve their problem, they can also lessen the business hours as their business was doing just fine even without increasing the business hours.
FORMAT: Short bond paper Double spaced Minimum of 2 pages (not including the cover page) Font: Times Roman 12

Cover Page BUSINESS CASE In partial fulfillment of the course requirement in ACTPACO (sec) Name Date

FORMAT OF WRITTEN REPORT I. Introduction II. Discussion/Analysis (answer the questions) Deadline: MW July 3, 2013 TH July 4, 2013

I.

Introduction

A partnership is where two or more people bind themselves to a contract whereby they all contribute capital or industry into a common fund and distribute profits among themselves. Entering into one means that any partner can handle its affairs for all which will make it easier for the business to be overseen, use each partners personal assets in the settlement of liabilities which makes it more reliable in the viewpoint of the creditor, share in the profits of the business, become a separate legal entity which helps the partners conserve their own personal element, and share in the assets of the business. However, life is not always rainbows in entering into one. One must take into account that a partnership may easily be dissolved either by law or by the partners themselves, may have more disagreements and disputes among partners, and each one is liable for the wrongful acts of his/ her co-partners. As such, in The Living Rooms case, we shall examine in detail how a partnership business may be properly managed and how we can address problems related to it.