Reference no: EM132293164

Doug Datner had an eclectic background. He completed his law degree from the University of Virginia, then went to work for a technology start-up in Dubai. After the start-up was purchased by a larger corporation, affording Doug a hefty sum of money, Doug and his spouse returned to the United States. While working with an architect and a designer to build their dream home, they realized that there was not a provider of high-quality custom-made door and window hardware at a reasonable price point in the United States. Even though Doug had no experience in the field, he decided to start a business manufacturing high-quality custom-made door and window hardware. He named the company Hardware House.

Doug and his wife cleared space in their newly constructed garage, designed several basic prototypes, and hired a metalwork expert to replicate their prototypes. They decided to have a few designs in catalog as one component of their business, but have the capability to alter those designs to provide designers with custom hardware.

The first few years were tough. Business was steady enough to hire a second metalwork expert, but cash flow challenges often made Doug worry whether he would be able to pay his metalwork experts on time. Still, the Hardware House had gained a number of consistent clients, and was able to move into an old warehouse space and expand operations. Ten years later, Hardware House has nearly 100 employees. While the majority of the employees work in manufacturing, there are also employees in marketing, design, accounting, and human resources. Doug structured the business to limit his liability in case of lawsuit, but still managed to maintain the business without sharing ownership.

Which of the following best describes the ownership of Hardware House?

a. Sole proprietorship

b. Corporation

c. General partnership

d. Limited partnership

e. Cooperative

Which of the following is an advantage Doug should expect by sharing ownership with others?

a. Gaining access to all of the distribution of profits.

b. Access to additional knowledge and expertise.

c. Additional freedom from government regulation.

d. Enhanced control to make decisions immediately.

e. Greater degree of secrecy.

Which of the following is a disadvantage Doug should expect by sharing ownership with others?

a. A reduction in access to skills.

b. Lessened opportunity for continuity.

c. Depleted access to funds.

d. Increased liability.

e. Additional government regulation.

Doug has determined that the most advantageous way to acquire cash is to sell stock to public markets. Doug will need to file which of the following?

a. initial public offering

b. Articles of partnership

c. Articles of incorporation

d. Limited liability corporation

e. Quasi-public corporation

Doug is forming a Board of Directors to oversee Hardware House. Which of the following statements best represents a practice Doug should implement in order to insure that he attracts board members with adequate expertise and time to focus on the company.

a. Decrease the mandatory retirement age of board members.

b. Encourage board members to serve on multiple boards together.

c. Only allow board members to serve on one other board.

d. Recruit board members early in their career.

e. All of the answers are true.