Legal Aspects of Decision-Making in the Grocery Store - Term Paper Example

Business Organisation AFFILIATION: Business Chosen: Grocery Store Nature of Business: Sole Proprietorship Personal Liabilities within a Business The last century saw an evolution in the business world. Businesses started to get more organised hence the world witnessed the golden era of the business world. The rapid strides that the business world made was the direct result of the determination a human has towards achieving set goals. The important aspect of the success is that he / she does not stop after achieving the goals or objectives but in fact set higher goals in order to achieve more. This idealism transformed the world into the one we are living today. With the evolution of the business world more and more sophistications came into the operations of business. The main aim behind all these changes and sophistications was to create a system under which the business world could grow. The introduction of legalities was another aspect that played a huge role in the development of the business world. The legalities made sure that the business practices are free from any element that can hurt a belief, value, culture, norm, etc. Business can be intuited after a thorough research of the market also keeping in view the personal capability as well. A grocery store can be a good investment especially for the one who is entering the business world. The option of grocery business is selected as the chances of return in the business are high and the complexities of legal procedures and licenses, etc. are not included (Pakroo, 2012). The sole proprietorship nature of the business allows it to be started more conveniently than other forms of business. The procedure might not be easy but it is not complex either. The sole proprietorship business puts all of the responsibility on the shoulder of the owner. The unlimited liability of the owner in the business is rather challenging. Sole proprietorship business can be started without any hassle as it does not involve any formalities that large corporations require. The first responsibility of the owner to start the business is choosing a name for the business. Starting a grocery store will not involve any complexities of partnerships that big corporations require at the start of their operations. In the grocery store the requirement of acquiring a license is not included. License to sell different products may be a requirement in some cases but they can be obtained rather easily. For example to sell liquor a license is needed and it can be obtained much more easily than acquiring a license to start a business involving partners or corporations. The next step in starting a business is the selection of a name. The owner can choose names that can be his/ her name or any other name. After choosing the name the owner has to file a document in the local government office to inform that he / she has decided to start a business with this name. The document that is filed for recognising your business is more appropriately known as “doing business as” (DBA) document (Bouchoux, 2009). The main purpose of this document is to state clearly who is the owner of the business so that he / she can be questioned in case of any mishap. So, basically it protects the consumers against any act of deceit or fault as they can file a suit against the owner. The concept of limited liability is not applicable in the sole proprietorship. The next major responsibility that is critical in the operation of a sole proprietorship is the payment of taxes. In most cases the sole proprietor requires a basic license from the bank to initiate business operations. The license basically gathers information about the business that whether it is a sole proprietorship, partnership, etc. The owner of the business has to indicate other general information like name, address, etc. The business would require obtaining a sale tax permit from the designated office as the grocery business involves selling of different products. Another major responsibility as an owner of the business would be to apply for the employee identification number so that necessary arrangements can be made to withhold federal income tax. The taxation is an important aspect of any business form. Every business is liable to pay taxes whether it is a sole proprietorship, partnership or any other form of business. In sole proprietorship the business is not recognised as a different entity due to which the owner does not have to pay the federal income tax for the business as in other forms of business. These are the general liabilities that are applicable on the owner of a sole proprietorship business. Role of Shareholders, Directors, and Partners in a business Most forms of the businesses involve a number of owners as there are stakes invested in the firm by them. As the business world grew organisation found varying types of ways through which they raise capital for their firms. They started bringing in more partners with an aim of increasing the financial resources and expertise as well. The most famous and successful way of raising capital however discovered was when companies went public. This way they could offer a minority share to the general public and in return they invested their savings in the firm which made them a shareholder in the company. The company can use the generated capital to run its operations and yield profit out of it, which then may or may not be disbursed. This increased the role of shareholders, partners, and directors in any form of the business. The roles of directors, shareholder or partner differ from each other in different ways. The directors of the firm are responsible for the overall operations of the business. He / she holds the right of stewardship. The overall supervising, management and status of the firm fall under the authority of directors. Moreover, the decision making power regarding the firm’s operations and resources also lies with them. On the other hand, shareholders are the ones whose resources have been invested in the firm. They have the power to vote and select directors of the firm. In normal circumstances shareholders have no right or have no direct involvement in the overall supervision or management of the firm. They are represented in the firm by the directors for whom they vote and they are the one who are involved directly in the decision making. If the directors of the firm do not perform up to the standards, the shareholders may raise voice for their removal and can deny voting them in future. Another aspect that needs elaboration is the fact that shareholders cannot impose their views or suggestions on the directors as they possess no decision making power. The directors on the other hand are not liable to obey all the wishes or view of shareholders (Esty, 2007). A director is directly answerable to the firm or organisation and nothing else. Directors are awarded all the powers in good faith and with a view that they are accountable for every step they take. The laws and principles that the company has in store are absolute and there is no flexibility applicable to them. Directors are required to perform their services with a view that they are in the best possible interest of the firm. While performing their services they will encounter situations where they find themselves in a number of challenging situations, but the main aim in dealing with all these situations remains same i.e. what is in the best interest of the firm? So, all of their commitment should be dedicated to yielding the best results for the firm and ultimately increase the shareholder’s wealth (Freeman, 1999). One of the tough challenges that directors face is the situation when the goals of the corporation and the shareholders starts to move in the opposite directions. The shareholder might press directors to pursue for short term gains which may or may not be in favour of the organisation’s long term goals. The directors have to be very tactful in dealing these scenarios as they can have devastating effects on the firm’s success. The role of directors is very diverse in any firm. However, the importance of shareholders cannot be neglected as well. In most cases their participation is critical to any firm’s success. Firms have to focus on tasks that can enhance the satisfaction level of their stakeholders. An unsatisfied shareholder is by no means in the best interest of the firm. There are certain situations that require an active participation of the shareholders. Some of these situations include the disposing of major assets like plants, the addition of any major asset, changes in the share capital, change in policies regarding the transfer of shares, change of policies that may affect the operations of business, etc. If we examine the above mentioned situations the most common element found would be that all these situations directly affects the shareholders. Directors, partners, shareholders, etc. are an important element of any business. Their collaboration can decide the fate of that particular business. If all these work for mutual benefit it can automatically have a positive effect on the firm’s growth. The main objective that all of them should share is the betterment of the organisation they are part of. Importance of legal Constraints in Decision Making Decision making is an important aspect of any business regardless of its size, industry, business, etc. The successful businesses have an element in common i.e. that they are able to make the right decisions at the right time. A single effective decision can change the entire fate and the complexion of the business as it can yield profitable returns for the organisation. Each and every organisation worldwide is extremely conscious of the decision making process due to which they pay special attention in devising policies regarding decision making. As Armesh (n.d) define decision making as the process that allows the selection of best possible and logical option from different available choices. This shows that the decision making process enables the firms to choose options that are viable and expected to increase the profit base of the company. The decision making is of immense importance for firms to achieve sustained competitive advantage. The decision to launch a product or service, whether to invest in a venture or not, etc. are all part of the decision making process. If examined closely all are important in deciding the performance of an organisation. The decision making process is influenced by a variety of factors including emotional, experience, situational, etc. All of the factors influence the decision making process in a positive or negative manner. The influence of legal constraints in the decision making process is pivotal. It can benefit organisation in a number of ways and can sometimes have negative impacts on the performance as well (Colle, 2005). Since the decision making process is of such critical importance, organisation needs to devise certain policies and procedures that can make the process transparent and within the limits. The need of limitations is important as the free decision making process can have adverse effects on the firms operations (Hodgkinson and Starbuck, 2008). The need of the legal constraints arouse when the stakeholders realised the consequences of making one bad decision on the firm. The firms which are dependent on the perceptions of their customer cannot afford to hurt their norms, values, beliefs, etc. Moreover, the legal constraints allow firms to create transparency among their decision making process as proper policies and procedures are required to take a certain decision (Stanton, 2008). The word legal can be defined as meeting the requirements of the law (Freeman, 1999). It allows the firm to ensure that every decision that will be made in the organisation falls within the limits of the law. This can help firms in situations where a decision that might not have planned out well for them, they will be in a position to defend the logic of the decision. The legal constraints make sure that employees of the firm always work in the light of the contract they signed with the organisation. They know if they exceed their limits they will have to face the consequences that may very well end their professional career. For example, if any employee that has the power of decision making makes some decisions that are in the personal interest rather than the organisational interests, the organisation will hold the right to file a suit or take necessary action against him (Pacelle, Curry, and Marshall, 2011). The legal boundaries protect the firm from any fraud and deceit that can have a damaging effect on their brand image. It allows them the luxury of safety in any situation and hence allows them to make better decisions in the favour of the organisation and its shareholders. Organisation worldwide are increasingly putting emphasis on the legal aspects of decision making. This is the very reason that organisation have started to hire professional lawyers and some have created a new department related to legal and law matters. They have hired their services in formulating policies and procedures of companies and also to look after the legal and compliance issues of the company. The legal constraints do not only help firms but are of critical importance to the customers as well. They can feel secure that there will be no product or service launched by any company that can hurt their feelings, beliefs, values, etc. These legal constraints compel firms to be extremely cautious in designing a service because if they do not comply with the legal boundaries they will have a tough time. For example, in the Islamic countries no business entity can launch a business that does not fall under the category of Halal. In order to understand more clearly firms working in Saudi Arabia cannot sell pork or liquor or even use a small quantity in products as both items does not fall under the Halal categories of food. If any firm practices this it will have to face severe penalties. The legal constraints are made to assist organisation in the smooth flow of their operations and in their journey towards the achievement of their mission and vision. In some situations the organisation or stakeholders or strategic heads may feel hard done by these legal constraints as they feel they had to incur an opportunity cost in some situations as the legal constraints compels them to take a route that might incur more cost. However, there is no declining to the fact that the benefits of the legal constraints are much more than the losses (Nemati and Maqsal, 2010). The legal constraints show a clear path to the firm, which it can use to achieve its goals and objectives. This, interestingly, helps firms to remain focused and committed to the cause i.e. reach substantial profits. Moreover, it may also help firms in igniting the creative part of their business because in most cases the boundaries forces them to think out of the box which is an important element of any business. So, in the current scenario of the business world the legal constraints are extremely critical as they provide the exact guideline that firms can follow to run their business operations smoothly and without any hassle in this ever evolving world. The changing values and cultures is a tough challenge that every organisation, in any industry, faces today and legal constraints have emerged as blessings in disguise for the business world. References Bouchoux D.E., 2010. Business Organisation for Paralegals, Fifth Edition. New York: Aspen Publishers. Colle, S.D., 2005. A Stakeholder Management Model For Ethical Decision Making. International Journal of Management and Decision Making, 6( ¾), pp. 301-306. Esty, D.C., 2007. Good Governance at the World Trade Organization: Building a Foundation of Administrative Law. Journal of International Economic Law, 10(3), p.509-527. Freeman R.M., 1999. Correctional Organisation and Management: Public Policy Challenges, Behavior. Woburn MA: British Library Cataloguing in Publication Data. Hamed, A., n.d. Decision Making. Multimedia University Malaysia, 1(1), pp. 01-02. Hodgkinson G.P. and Starbuck W.H., 2008. The Oxford Handbook of Organisational Decision Making. New York: Oxford University Press. Nemati, A.R. & Maqsal, M., 2010. Impact of Resource Based View and Resource Dependence Theory on Strategic Decision Making. Journal of Business and Management, 5(12), p.110-115.  Pacelle, R.L. Jr,, Curry, B.W., and Marshall, B.W., 2011. Decision Making by the Modern Supreme Court. New York: Cambridge University Press. Pakroo, P.H., 2012. The Small Business Start-Up Kit: A Step-By-Step Legal Guide. USA: BANG Printing. Stanton, M.A., 2008. Superintendents Ethical and Legal Decision Making. Ann Arbor: ProQuest Information and learning Company. Read More