Portfolio

Florian Zunino

TABLE OF CONTENTS

FLORIAN ZUNINO ---------------------------------------------------------------------------1

TABLE OF CONTENTS ---------------------------------------------------------------------2
INDIVIDUAL MEMORANDUMS ----------------------------------------------------------6
I. Patent & Intellectual Property ------------------------------------------------------------------7
A. General Patent ..........................................................................................................7
B. Orphan Status ...........................................................................................................8
C. Intellectual Property .................................................................................................9
II. Choice of Entity ----------------------------------------------------------------------------------9
A. General Partnership ..................................................................................................9
B. Limited Partnership ................................................................................................10
C. Limited Liability Partnership .................................................................................10
D. S-Corporation .........................................................................................................10
E. C-Corporation ........................................................................................................10
F. Limited Liability Company ....................................................................................10
G. Corporate Name .....................................................................................................11
III. Corporate Governance--------------------------------------------------------------------------11
A. Structure .................................................................................................................11
B. Conflict of Interest .................................................................................................12
C. International Expansion .........................................................................................12
IV. Capital Funding ---------------------------------------------------------------------------------12
A. Grants .....................................................................................................................12
B. Equity .....................................................................................................................13
C. Debt ........................................................................................................................13
D. Licensing Agreement .............................................................................................13
I.

Sexual Harassment Definition ----------------------------------------------------------------14

II. Objectivity Vs Subjectivity of Sexual Harassment ----------------------------------------14

III. Toms and his Attorneys meeting ------------------------------------------------------------15
A. if you sue ........................................................................................................15
B. If you dont sue ...............................................................................................15
IV. Scenarios -----------------------------------------------------------------------------------------15
A. What do you do? ....................................................................................................15
B. What should your administrative assistant do? ......................................................16
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V. Human Resource Department -----------------------------------------------------------------16

VI. Human Resource Procedure -------------------------------------------------------------------17
VII.Harassment and rainmaker -------------------------------------------------------------------17
VIII. Ethical Theories -------------------------------------------------------------------------------17
IX. Tom's wife support -----------------------------------------------------------------------------17
I.

Cost analysis ------------------------------------------------------------------------------------19

A. Costs Analysis ........................................................................................................19
B. Total Variable Cost Scatter Diagram ......................................................................19
C. Average Variable Cost Scatter Diagram .................................................................20
D. Average Variable Cost Equation ............................................................................20
E. Analysis of the Average Cost Equation ..................................................................20

II. Production Advices -----------------------------------------------------------------------------20

A. If the world prices is $62 per chip:.........................................................................20
B. If the world prices is $35 per chip:.........................................................................20
III. Short-Run Production Shut Down -----------------------------------------------------------21
I.

Method Analysis Choice & Variables Analysis --------------------------------------------22

II. Demand Equation & Parameters Analysis --------------------------------------------------22

III. Elasticity Analysis ------------------------------------------------------------------------------22

GROUP MEMORANDUMS ---------------------------------------------------------------24

I.

Reinforcement or change in the view --------------------------------------------------------26

II. Car design or manufacturers defect ----------------------------------------------------------26

III. Punitive Damages ------------------------------------------------------------------------------26
IV. The goal of the attorney and the guy in the wheelchair -----------------------------------27
V. The missing document ------------------------------------------------------------------------27
VI. Reason why the company didnt want the case to go to trial ----------------------------27
VII.Liability for a product defect: Class Action vs. the Toyota lawsuit. ---------------------27
A. Class Action Movie ................................................................................................27
i)

Product must be in a defective condition when sold.

ii) Defendant must be engaged in selling that product.

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27

iii) Product must be "unreasonably dangerous"; product is dangerous beyond

ordinary expectation or less dangerous alternative not used.
28
iv) Plaintiff must incur injury to self or property by use or consumption of the

product.

28
v) Defective condition must be caused.

28

vi) Goods have not be substantially changed from time of sale

28

B. Toyota Lawsuit .......................................................................................................28

VIII. Provide your overall assessment of the movie in light of your readings and personal
experience.---------------------------------------------------------------------------------------29
I.

David Shrank is an Entrepreneur -------------------------------------------------------------30

II. Venture Idea Behind New Luxury Ventures ------------------------------------------------31

III. Transform an Idea Into an Opportunity ------------------------------------------------------31
IV. Making the Plunge Decision ------------------------------------------------------------------31
V. Making this Venture Happens-----------------------------------------------------------------32
VI. Success and Failure ----------------------------------------------------------------------------32
I.

Analysis of the Situation-----------------------------------------------------------------------34

II. Proposed Solution ------------------------------------------------------------------------------34

I.

Entrepreneurial Traits --------------------------------------------------------------------------36

A. Common traits of successful entrepreneurs ...........................................................36
B. Discussion of the Traits of Mark Zuckerberg (MZ) ...........................................36
C. Discussion of the Traits of the Winklevoss Twins (Twins) ................................37

II. Ideas to New Venture Creation ---------------------------------------------------------------37

A. Comparing the ideas of MZ and the twins ............................................................37
B. Can the idea become a successful business............................................................37
III. Intellectual property ----------------------------------------------------------------------------37
A. Did MZ violate intellectual property law ...............................................................37
B. Non-Compete/Non-Disclosure agreement .............................................................38
C. Did MZ act ethically in the creation of the Facebook ........................................38
IV. Partners/Peers -----------------------------------------------------------------------------------38
V. Corporate culture -------------------------------------------------------------------------------38
VI. Employment Agreements ----------------------------------------------------------------------39
A. Lessons learned from verbal agreements............................................................39
B. Different approach to verbal agreements ...............................................................39
VII. Company Growth -----------------------------------------------------------------------------39
A. Difference between MZ and Eduardos approaches ..............................................39

INDIVIDUAL MEMORANDUMS

MEMORANDUM
To: Joseph Lakatos
From: Florian Zunino
Date: 05/01/2014
Re: Biotech Final Project
______________________________________________________________________
EXECUTIVE SUMMARY
During their research for the University of Michigan, Dr. Lewis and Dr. Ortiz have developed
a breakthrough process and a new drug called MD-12 and proved its potential efficacy to cure
cancer.
Facing a couple of intellectual property and patent issues, the two doctors would like to get
the FDA approval to release this new drug on the market. For this, they will need to manage all the
intellectual property issues with the University of Michigan and Zurich & Fischer who claims the
patent of the process and MD-12. Then, they will have to choose the appropriate entity to create
their business, get funding and develop their medication research and development corporation.
I. Patent & Intellectual Property
A. General Patent
The development of new product, service or process can lead to significant money and time
investments. To make those investments profitable and support innovation, governments provide a
series of rights to give the exclusivity of making, using and selling the creation to its inventor for a
limited time.
To obtain those privileges, inventor must patent it. To be patentable, an innovation must be
non obvious, unique and not found in nature. The protection starts to be provided when the patent is
filled to the appropriate organization (Patent & Trademark Agency for an American patent or World
Intellectual Property Organization for an international patent for example). From the date of the
filling process, the innovation is protected for twenty (20) years.
However to approve the patent, the agency verifies that the organization/individual who is
asking for the patent actually invented the innovation. If not, a patent infringement occurs and the
exclusive rights disappear. Then, the agency verifies if the agent is the first to have invented it. If
someone invented it before (and did not patent it), the agency verifies if the demander did his
research independently or if he stole the idea from the first inventor. Patent infringement occurs if
the researches have not been done independently.

In the U.S., patent infringement is not a crime but a tort which can lead to severe financial
penalties. The final decision of the trial opposing Apple and Samsung, required the Korean company
to pay more than $290 million to its rival for patent infringement 1.

B. Orphan Status
In the case study, Dr. Lewis and Dr. Ortiz have developed a new drug called MD-12 that
has the potential of reducing macular degeneration in humans or in other words, help to cure cancer.
To protect the MD-12, the two scientists have to patent their drug but also have the Federal and Drug
Administrations approval before releasing the drug on the market.
The process to find any patent infringement is the same than for normal goods and process.
In this case, an infringement may be seen since Zurich and Fischer claim that they made the big
breakthrough in the concentration process of the MD-12 and patented the drug last year. However,
Dr. Lewis and Ortiz actually started their research at the University of Michigan before Zurich and
Fischers publication. Furthermore, they have been able to isolate the drug contrary to the two
scientists claiming the patent. We can so conclude that even Dr. Lewis and Ortiz discover the
MD-12 after Zurich and Fischer, their research were independent and so, there is not patent
infringement and they do not owe any royalties or money for the use of the MD-12 to Zurich and
Fischer.
To approve the drug, the FDA requires a specific process to test the safety and the efficacy of
the medication. Since this process may require up to 14 years, the Orphan Status extends the
exclusivity of drugs exploitation rights of seven (7) years (for a total of 27 years) to allow the
pharmaceutical corporations to make profit.
Dr. Lewis and Dr. Ortiz succeeded the pre trial tests during which they have experimented
the MD-12 on animals at the University of Michigan proving its potential efficacy. This is why they
want the FDA approval. This FDA process which is named drug review process is composed of
three (3) phases:
Phase I : Test on 20 to 50 people - requires between up to two years.
Phase II : Test on more than 100 people - requires between up to five years.
Phase III : Test on 1,066 people ideally - requires up to seven years.
During the different step, the FDA verifies the safety and the efficacy of the drug. If the
agency approves one phase, the scientists will be allow to start the next phase until the approval of
the phase III after which the drug is officially approved and can be released on the market. All those
tests cost a significant amount of money and time (up to 14 years) which is the main reason of the
Orphan Status and the extension of the patent rights for drugs.
Here, after their success in the pretrials test, Dr. Lewis and Dr. Ortiz are looking to start the
phase I. To start, they need to create a business entity, organize the new business and get funding.
1http://www.cnet.com/news/jury-reaches-verdict-in-apple-v-samsung-damages-retrial/

C. Intellectual Property
A last intellectual property problem that Dr. Lewis and Dr. Ortiz may face to is an issue with
the University of Michigan. In fact, since the pretrial test (during which they discover the
breakthrough process, the MD-12 and its potential efficacy) has been discovered during their
research for the University, we may expect that the University owes some intellectual property over
the drug. Looking at the University of Michigan Technology Transfer Policy 2, we can read that
Intellectual Property made by any person, regardless of employment status, with the direct or
indirect support of funds administered by the University (regardless of the source of such funds)
shall be the property of the University. Consequently, the breakthrough process as well as the
MD-12 would be property of the University of Michigan except if the two Doctors have signed
contracts protecting their discoveries intellectual property.

Since the university policies does not allow Lewis and Ortiz to continue the approval process
using its equipment and facilities, they should sign either a licensing agreement to be allowed to use
the MD-12 and the breakthrough process owed by the University of Michigan or a waiver agreement
stating that the University renounces to its intellectual property over the drug and its breakthrough
process. The first agreement will lead to a share of the profit made by the drug with the University
(probably through royalties).
To protect their discovery and continue the development of the MD-12, Dr. Lewis and Dr.
Ortiz should so patent the breakthrough process as well as the drug itself. They will probably have
to do this process with the University of Michigan since it owes their discovery because of its policy.
They should also sign a contract with the university to allow them to use the process and the drug for
their future development in exchange of royalties.
II. Choice of Entity
Once all the intellectual property issues will be solved, the next step will be to create a
business entity to get funding for the FDA phase I approval research as well as the future release of
the drug on the market. For that, they will need to choose between the different types of business
entity available in the United States (General Partnership, Limited Partnership, Limited Liability
Partnership, S or C corporation, or Limited Liability Company). This choice is crucial for the future
development of their research since they all come with different advantages, rights but also cost and
duties.
A. General Partnership
A General Partnership (GP) is a business entity composed by two or more partners. All
partners share profit, debt and loss and have unlimited personal liabilities. Since pharmaceutical
2

http://www.techtransfer.umich.edu/resources/policies.php

product can lead to important consequence (due to unexpected side effects on some patients for
example), the type of entity would not be appropriated for Dr. Lewis and Dr. Ortiz and the MD-12
development since it implies personal risks.
B. Limited Partnership
A Limited Partnership (LP) is a business entity composed of at least one general partner and
one limited partner. Even though the limited partner will have limited liability over the business, the
general partner will be personally and unlimitedly liable if a problem occurs with the drug. So, for
the same reasons as a General Partnership, this entity is not appropriated for the MD-12 development
C. Limited Liability Partnership
A Limited Liability Partnership (LLP) is a business entity composed by Limited Partners.
All the partners have so, limited liability and cannot be liable for more than they invest in the
business. Which is a excellent point for the two doctors. However, the phase I requires a minimum
of $1.7 million and then, more fund will be needed for the next phases. Since the development of
the drug requires a significant amount of investment, a partnership (limited or not) will not be an
appropriate type of business for Dr. Lewis and Dr. Ortiz.
D. S-Corporation
An S-Corporation has a maximum of 100 shareholders who are liable only on their
investments and can avoid the double taxation which reduce the cost. The protection of limited
liability required for this business is so fulfilled. However, C-corporations and non US citizens are
not allowed to invest in S-corporation and the limited amount of shareholders will make difficult to
raise the money necessary to pass through the FDA approval. Corporate governance and keeping the
control over the business may be difficult to manage too.
E. C-Corporation
A C-Corporation is the type of corporation traded on the stock market. They have to be filed
with the SEC and required a complicated process to be created (article of incorporation, filed to the
Secretary of State etc). Shareholders have limited liability and it would be easy to raise fund for the
development of the MD-12. It could be a appropriated choice of entity option for Dr. Lewis and Dr.
Ortiz. However, it may be difficult to keep the control over the business because of the agency
problem.
F. Limited Liability Company
A Limited Liability Company is a mix between a partnership and a corporation. Limited
liability is provided by this legal entity. It is also a tax pass through which will limit the cost of the
company. Furthermore, the organization of LLC is really flexible but required clear operating
agreements.
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Dr. Lewis and Dr. Ortiz should create an Limited Liability Company. It will allow them to
pay less taxes and reduce their cost. It is easier to create than a C or S corporation and they will
keep the control over the business decision. Since LLCs are pretty flexible, they should be able to
find an appropriate structure to raise fund, keep the control over the business and limit the agency
problem. In future, it will be easy to switch to a C-corporation to raise more fund if needed and
invest in the research and development of new drugs and process.
G. Corporate Name
A last requirement for Lewis and Ortiz business creation is to choose a name which does not
infringe trademark regulation. LO Pharma would be an available name for their corporation. This
name has not been trademarked on May 1st, 2014 3 in the United States. Since they want to expand
overseas, it would be better to have a name which has not been trademarked internationally. After
register the name with the US Patent and Trademark Office (USPTO) they will need to register it
using the Madrid system of the World Intellectual Property Organization 4 (Wipo) to protect their
brand name internationally.

III. Corporate Governance

A. Structure
The advantage of a LLC is that any specific structure is required by law. Consequently, Dr.
Lewis and Dr. Ortiz can structure their business as they want to adapt it to their needs.
Since they do not have much business knowledge and experience, they should create a Board
of Directors. Those directors, who should have strong business knowledge would be able to either
advise them to run the business and provide sufficient fundings.
Dr. Lewis would like to serve as Chief Operating Officer (COO) and oversee the R&D while
Dr. Ortiz would like to serve as Chief Executive Officer (CEO) and liaison with the FDA. Even
though it is a good idea to have Executives with strong knowledge in the actual product (MD-12) a
future products (other drugs and process), we might not disregard their lack of business knowledge
and skills. They should so, either be sure to have an excellent advisory board or integrate some
business men within the Executive team to be sure that decision making will be business oriented.
They might for example integrate Henry Jenkins who is interested in a place in the Board of
Directors and has finance knowledge. He might serve as a Chief Financial Officer for example.

http://tess2.uspto.gov/bin/gate.exe?f=searchss&state=4810:etg056.1.1

http://www.wipo.int/madrid/en/

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B. Conflict of Interest
Ortizs brother-in-law would like to enter in the Board of Director (BoD) in exchange of a
discount on a buildings lease he owes. This situation might lead to a conflict of interest. If Henry
Jenkins rises the price of the lease afterward, he will make profit on the business in which he has
responsibility. To protect the business and limit this risk, Lewis and Ortiz should sign a contract or
agreement to be sure that he will not raise the price for a certain period.
C. International Expansion
Since the investments to develop the MD-12 will be significant, they should definitely
expand their business overseas and sell the drug worldwide. To expand, they will have to get the
approval of internationals and nationals agencies in the countries they want to proceed. They should
also fill an international patent to be protected internationally.
To expand overseas, they will have to chose between different type of expansion such as
building a transnational (decision in the home country), multinational (decision taking in each
country) but also international licensing.
Since the products they will develop will required a important amount of time and
investment, the best would be to have all the research in the home country, protected their product
internationally through patents and then, either sell their products from the home country or license
their product to known business in each country they want to expand. Typically, a company which
develops new drug will be more willing to license its new drugs to cut all the production and selling
tasks and focus on the R&D of other medications. Consequently, the best for Dr. Lewis and Dr.
Ortiz would be to focus on the R&D and then license the MS-12 and future medication to another
business either in the US and other countries.
IV. Capital Funding
In healthcare and pharmaceutical business, the amount of money needed reach billions really
easily without any guaranty of return on investment if the FDA does not approved the new drugs.
Capital funding will consequently be a vital aspect of Dr. Lewis and Dr. Ortiz future business. To
raise fund, they can adopt different methods such as asking for grants, using debt and equity and
once the drugs will be approved by the FDA and sold, licensing agreements.
A. Grants
The building provided by Henry Jenkins is situated within the Research Triangle of North
Carolina. This geographic zone is best known for its research and development centers. Therefore,
and since their researches retain public interests, they might be able to get state or federal grants to
finance their research and develop the MD-12 as well as their future possible medication.

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B. Equity
The advantage of a LLC is also that they will be able to issue shares or dissolve a part of their
shares to get more funding. Even C-corporation are allowed to buy shares of LLC which would
provide enough investments for their business. New shareholders will be more and more attracted
by their shares with the advancement of the FDA approval. Furthermore, if the FDA approval is
finally not issued, the shareholders will loose money but not the corporation which can be a security
while looking for fundings.
C. Debt
Another way to get funding is to issue debt. In fact, since the return on investment will be
important if the MD-12 is approved, it might be a solution to raise important capital. However, if the
FDA approval fails, it will be hard to reimburse the debt and so, to reinvest in other drugs
development which will be synonym of a bankruptcy and a shut down of the corporation.
D. Licensing Agreement
Once the MD-12 will be approved, Dr. Lewis and Dr. Ortiz will probably enter into licensing
agreements with other corporations, allowing them to use their drugs and process. In exchange of
their authorization, the LLC will earn a significant amount of cash which can be reinvest in new
research and development to increase the drug and breakthrough process portfolio of the LLC.
CONCLUSION
While Dr. Lewis and Dr. Ortiz do not have any issue of patent infringement with Zurich and
Fischer because of they have done their research independently, they will face intellectual property
issues with the University of Michigan which owes the process and MD-12 in view of its
Technology Transfer Policy. However, those issues can be solved using contracts and agreements
between the two scientists and the University.
To best fit the need of funding and flexibility of the corporation, they should create a Limited
Liability Company which will provide limited liability, flexibility of corporate governance to
compensate their lack of business knowledge as well as the capability to raise fund for actual and
future capital needs through debt, equity, or even grants.
Once the drug will be approved by the FDA, they should license the MD-12 to
pharmaceutical corporation to focus on the R&D of other drugs and cut all the business, production,
distribution etc. aspect of medication.

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MEMORANDUM
To: Joseph Lakatos
From: Florian Zunino
Date: 02/18/2014
Re: Sexual Harassment
______________________________________________________________________
EXECUTIVE SUMMARY
In the movie Disclosure (1994), Tom is sexually harassed by his manager highlighting one of
the problem that managers have to face in the current employment world. Sexual harassment is a
complicated affair to resolve and it might not be a real solution because of catch 22 occurrences. In
this memorandum, we will discuss the possible solutions facing sexual harassment in a cooperation
and the consequences that might be implied by this kind of problem.
I.

Sexual Harassment Definition

The attorney defines sexual harassment as a game. For her, it is not about sex but about
power. The one who has more power over the other wins. It is about proving who is the most
powerful. I understand in it in the sense that sexual harassment is a proof of power. It is quite hard
to prove if sexual harassment really occurred. In fact, even though you say no, it does not mean
no all the time in private relation since love and sexual relationship are based on a kind of
seduction game. Then, it can be viewed as a game of who has the most power.
At the opposite, for the EEOC it is some unwelcome sexual advances, requests for sexual
favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when
this conduct explicitly or implicitly affects an individuals employment, unreasonably interferes with
an individuals work performance, or creates an intimidating, hostile, or offensive work
environment 5. For the EEOC, it is though, all about sex and behavior of one over another.

II. Objectivity Vs Subjectivity of Sexual Harassment

As written in the section I, love and sexual relationships are a kind of game between two
persons. Sometimes to seduce, you have to play with the others desire and consequently, the two
have sexual harassment test can only be subjective. In fact, the goal of this test is to determine if
the two parties have been consenting and it cannot be proved only based on the fact that they had sex
or that some inappropriate sentences have been said since it can be a seduction game between the
plaintiff and the defendant.

http://www.eeoc.gov/eeoc/publications/fs-sex.cfm

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III. Toms and his Attorneys meeting

A. if you sue
If you sue, you are taking professional risk since you will probably never get another job
since employers do not like this kind of publicity and then, you will represent a risk for them. At the
same time, it will be hard to prove the sexual harassment since a female harassing a male is not
current.
In fact,in this kind of situation, a double risk occurs. First because males are supposed to be
stronger and more powerful, people will have more difficulty to understand and believe that a male
can be sexually harassed. But it is only a matter of fact: it can occur. Secondly, in sexual
harassment process you are taking the risk to make in danger your future career. If you win the trial,
law will allow you to keep your position however, people working with you will have another vision
of you which can mead your to an harder work situation. If you loose the trial, while applying for a
job, recruiters will know that you have suited at tort your previous employer and though, you will
represent an unwelcome possible publicity threat. As a consequence, your chance to get the job will
decrease.
B. If you dont sue
If you dont sue feel barry on Austin and your wife wont believe you 6. By pronouncing
this statement, Toms attorney wants to highlight the lack of credibility among his wife and his
family since the trial can be viewed as the sexual harassment existence proof.

IV. Scenarios
As a manager, you co-supervise an administrative assistant in a firm that has a guys locker
room type mentality. Other staff and managers repeatedly make comments of a sexual nature to
your administrative assistant, who after 6 months of tolerating such behavior, comes to you for help.
A. What do you do?
At fisrt, I will speak to her to know exactly the situation, the comments which have been
made by who etc. Then, I will speak to her to reassure her and let her know that I will do my best to
resolve the situation by myself. I will try to convince her to not use outsource help such as her
lawyer etc. yet.
Then, I will speak to the staff and managers which I know made the comments and ask the
about what is happening. To be honest in real life I would probably trying to integrate myself to the
group making the harassment to know exactly how it is. If a manager come to see you asking what
did you say exactly, most people will lie and since it is a whole group, they will be more credible
than the assistant. So I will probably see this group making false comments to know their reaction
and if they are used to have this kind of conversation too.

https://www.youtube.com/watch?v=FHlYx3NaMzk

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Once I will have a sufficient knowledge of the situation, I will speak to the assistant again to
let her know that I have the confirmation (or not) of the what she reported to me. To make her trust
me and know that I am on her side. After that, I will speak to the group during a formal meeting and
tell them that if I have made the comments on the assistant it was only to know their reaction and
that they are screwed. I will let them understand that I do not tolerate such behavior and ask them to
stop and present their excuse to my assistant.
Additionally, and for the following months I will check on the situation really closely to
know if the work environment is impacted by the situation. If the situation has not stop, I would
contact the Human Resource department, advise my assistant to hire a lawyer or report to the EEOC.
If the situation is totally obstructed, I will use my personal connexion to find a new position
in another corporation to my actual assistant since it is the only viable solution in the kind of
circumstances. And then, I will hire a male assistant !
The catch 22 would be that the group harassing my assistant has more credibility but also that
even if they stop the harassment itself, the work environment would be altered. Except changing my
assistant there is not effective solution to solve this problem.
B. What should your administrative assistant do?
She should try to speak to the group and then, if it does not work see me to report it since I
am her closest manager. Then, if I cannot resolve the situation, she could speak to a higher manager,
a lawyer, the human resource department or the EEOC for an official complain.
Whatever she does, a catch 22 will occur and she will meet difficulty. If she does not do
anything, they will continue, if she tries to solve the problem by herself, she could make the situation
worse. Finally, if she reports to her manager, either he might not believe her (since a group has more
credibility) or he will solve the situation but her work environment will be altered.
V. Human Resource Department
In reality, is the HRD in a company there to help the staff or management or both? What do
you think would happen if the administrative assistant reported the matter to HR first? At what point
in time should you report the matter to HR if at all?
The Human Resource Department is here to help both management and staff. In fact, its
main purpose is to solve all potential situation internally to avoid any external and inadequate
publicity. Consequently, the human resource should help both management and staff on a case-tocase basis. We never know what could happen in an organization. Staff may use sexual harassment
as a vengeance against a manager, or a manager can be harassed by an employee etc. Human
Resource has to be effective enough to clarify the situation and solve it ethically.

16

If she have had report directly to the HR, the manager would have been in trouble since it is
his duty and responsibility to be aware of this kind of problems and manage/solve them. However, if
he is not able to solve it, it is also his duty to report it to the HR.
VI. Human Resource Procedure
What procedure should HR follow in this situation?
HR should follow its internal procedures and if it is not working, apply the law by filling a
suit under the EEOC.
VII. Harassment and rainmaker
What do you think would happen if the person who is commenting the harassment is a
rainmaker for the firm and is at the same levee or higher than you as a manager? How would this
affect your role as the manager or what you should do in this scenario?
If the person committing the harassment is a rainmaker and at the same of higher level than
me it will not change anything. Sexual harassment is not acceptable for me even if you have
outstanding work results. Consequently, I will resolve the situation anyway. However, I would take
more precautions while trying to figure it out what is happening exactly. If I am convinced of the
sexual harassment, I will speak to the rainmaker or even report to the HR depending of the situation.
Adaptivity is key is this kind of circumstances but the situation has to be resolved.
VIII. Ethical Theories
How do the ethical theories come into play?
administrative assistant?

How far would you go to help the

I care about this kind of problem and I think that such behaviors are not tolerable at work or
outside. I would so, go as far is I have to to solve the situation because it what we all should do !
IX. Tom's wife support
As a spouse how would you respond to what happened to Tom? Would you be supportive or
not? Discuss
I do not know Tom personally so I do not know his relationship with his wife. However, if I
marry someone one day, it will be because I am sure that she will love me and that I can trust her.
So, if this situation occur, I will be supportive whatever happens. However, I am aware that some

17

husband/wife relationships are broken and though, I can understand that a wife/husband might not be
supportive when sexual harassment occurs since it can be only an excuse to have cheated.
For me the reaction of the wife/husband facing sexual harassment only depend on the actual
relationship. I would like to be with my wife because of real love and trust but if some unsolvable
issues occur I will not stay with her since it will be a waste of time for both of us. Better be two
happy single persons than two unhappy married ones.
CONCLUSION
Sexual harassment is unfortunately a preoccupation that can be met by everyone, managers,
employees, clients or even business owners. Those situations (as others) are difficult to manager and
might not have any real solutions. However, they must be cleared up in one way or another. We
would just have to think outside the box to find the best solution possible.

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MEMORANDUM
To: James Ullmer
From: Florian Zunino
Date: 04/24/2014
Re: Consulting Project - Harding Silicon Enterprises, Inc

____________________________________________________________________________________

EXECUTIVE SUMMARY
Harding Silicon Enterprises, Inc is a corporation producing RAM chips for electronic devices
such as computers, tablets, phones etc. This corporation produces less than 1% of the worlds supply
of the 32 MB RAM chips. Harding Silicon Enterprises, Inc would like some advice concerning
short-run production costs, an statistical analysis of its fixed and variables costs and production
advices.
I.

Cost analysis
A. Costs Analysis

Materials expenses, Energy expenses and Wage expenses are the only Variable costs for Harding
Silicon Enterprises, Inc.
See table for Total Variable Cost and Average Variable Cost.
B. Total Variable Cost Scatter Diagram
The scatter diagram of Total Variable Cost and Quantity is (supposed to be) S-shaped. So the
equation form is
TVC = aQ + bQ2 + cQ3
TVC
400000

300000

200000

100000

2000

4000

6000

8000

19

C. Average Variable Cost Scatter Diagram

The scatter diagram of Average Variable Cost and Quantity is U-shaped. So the equation form is
AVC = a + bQ + cQ2
AVC
44

33

22

11

2000

4000

6000

8000

D. Average Variable Cost Equation

AVC = a + bQ + cQ2 => AVC = 32.0448 - 0.00108 Q + 0.00000031 Q2
E. Analysis of the Average Cost Equation
a and c are extremely significant since P-value are almost 0, b is significant at a 10.528% level.
R-Square = 0.8404 which means that 84.04% of the variation can be explained by our model.
> 0, b < 0 and > 0 which correspond to the usual expectations.
II. Production Advices
A. If the world prices is $62 per chip:
62 = TVC
62 = 32.0448 - 0.00216 Q + 0.00000093 Q2
Q* = 6,954
Forecasted profit:
P = 448,012 - 292,130 - 6,500 = $149,382
If the price sets by the market raises $62 per chips, Harding Silicon Enterprises should
produce 6,954 chips per month which will lead to a profit of $149,382.
B. If the world prices is $35 per chip:

20

35 = TVC
35 = 32.0448 - 0.00216 Q + 0.00000093 Q2
Q* = 3,298
Forecasted profit:
P = 94,605 - 84,849 - 6,500 = $3,872
If the price sets by the market raises $35 per chips, Harding Silicon Enterprises should
produce 6,954 chips per month which will lead to a profit of $3,298.
III. Short-Run Production Shut Down
To compute the price for which Harding Silicon Enterprises should shut down his production,
we have to find the price and the quality for which the corporation will cover its Total Variable Cost.
On the short run, the firm will only break-even. Even if it will not be profitable, it should however
not shut down to keep their actual customers. To find those two values we have first to compute the
quantity of chips they have to produce to balance their minimum Average Variable Cost (AVC):
AVC = 0
0.00108 + 0.00000062 Q = 0
Q* = - 0.00108 / 0.00000062 = 1,741.93
Then, we have to find the price for which the firm will cover its Total Variable Cost producing
1,741.93 chips
P = 32.0448 - 0.00216 * 1,741.93 + 0.000,000,93 * 1,741.93 2
P = 32.0448 - 3.76 + 2.82
P = $31.10
In the short run, if the price is $31.10 or less, Harding should shut down. If the price raise
$31.10, the company should continue to produce on the short-run in order to keep its actual
customers.

21

MEMORANDUM
To: James Ullmer
From: Florian Zunino
Date: 04/03/2014
Re: Consulting Project - Estimating Industry Demand for Fresh Market Carrots

____________________________________________________________________________________

EXECUTIVE SUMMARY
In this consulting project, we are going to analyze the Fresh Market carrots from the real data
of this market between 1983 and 2000. Those data include Price, Quantity sold and a Weather index.
The main goal is to study the relation between the weather, its consequences on the production of
carrots and its price.
I.

Method Analysis Choice & Variables Analysis

Farmers are price takers. They do not set the price but take the price set by the market
(depending of the demand and supply). Consequently, we should use the two-stage least-squares
method (2SLS).
Since Q and P are specific to our model, they are endogenous variables. t and W are
exogenous since they depends of factors outside our model. The equation of the demand is Qd = a +
bP +ct and Qs = d + eP + fW. Since the exogenous variable W is contained in Qd but not in Qs, the
Demand is considered as identified.
II. Demand Equation & Parameters Analysis
Qd = - 1,848,628 545.782P + 938.443t
B and c are statistically significant at 13.57% (since P of P = 0.1357) or higher so, they are
statistically significant at a 15% level of significance. b = - 545.782, since b is negative, its sign
respects the law of demand. Looking at the data, we can notice that the quantity demanded increases
from 7,242 in 1983 up to 17,992 in 2000, c is so supposed to be positive. In our equation we have
found a c equal to 935.443 which is positive. Both algebraic signs of the parameter estimates are so,
reasonable.
III. Elasticity Analysis
Carrot is a basic product/vegetable, relatively cheap, we do not consume a large amount of
carrot. Consequently, I would expect its demand to be inelastic since we (consumers) will not be
willing to substitute carrot by something else.
Average t = 1991.5
22

Average Q = 12,405
Average P = 14.43
Average W = 102.4
Qd = - 1,848,628 545.782 (14.43) + 938.443 (1991.5) = 12,405.600
(calculation correct since the result is close to the Average of Q it is not equal because we rounded
some numbers).
Ed= %deltaP / %deltaQ = b * P/Q = -545.782 * 14.43 / 12,405.6 = -0.6348
< 0 so the demand of carrot is inelastic for this sample.

Ed

Ed= %deltaP / %deltaQ -0.6348 = 0.1 / %deltaP %deltaP = -0.1575 or -15.75%

For each increase of t by one (delta t = +1), or in other words, each year passing, there is a
938.443 increase in the demand of carrot. Because the unit of Q is given in thousands of hundreds
weight units, it means that each year the demand of carrot increases of 938,443 hundred weight units
(on average).
CONCLUSION
The weather is one of the parameter affecting the production of fresh carrots. As a
consequence, it can affect the price of fresh carrots. As most of the markets, the price of fresh
carrots also depends of its demand. Since carrots are relatively cheap and fits in the category of
basic products, its demand is inelastic which mean that customers will not be willing to substitute
carrot by another product.

23

GROUP MEMORANDUMS

24

To: Dr. Lakatos

From: Adam Hambleton, Flo Zunino, Yannis Chanlindar, Nathaniel Slack, Amanda Bowin
Date: 03/05/2014
Re: Motto and logo

____________________________________________________________________________________

Throughout the semester, we have worked on a business project that we named Flo
Service. It is a new technology tool, mix of smartphones/tablets applications and computer
softwares to improve waiters and managers efficiency in restaurants, bars, nightclubs or hotel room
services.


Planet represents the fact that our service corresponds to a global market since it can be used by any
restoration business worldwide (including Nightclub, restaurant, hotel room service etc.)
Choice of color7:
Red: Excitement, energy, passion,,, speed, strength, power
Blue: Peace, tranquility, stability, unity, trust, confidence, security, loyalty, technology
Black: Power, sophistication, formality, elegance, wealth, fear, style, underground, good technical
color

Tech up to Keep up
We are a technologic business willing to help you to keep up your business. Thanks to us you will
continue to improve your business efficiency and reduce your cost.

http://www.incredibleart.org/lessons/middle/color2.htm

25

MEMORANDUM
To: Dr. Lakatos
From: Florian Zunino, Yannis Chalindar, Amanda Bowen, Adam Hambleton & Nathaniel Slack
Date: 03/05/2014
Re: Class Action
____________________________________________________________________________________

EXECUTIVE SUMMARY
Class Action is a movie about two lawyers from the same family on separate sides in the
court room. The daughter was working for a firm full of corporate lawyers while the father operated
a partnership firm where he took on the corporate lawyers; what he called "David and Goliath"
cases. The daughter quickly finds out that the corporate lawyers, and the company that the lawsuit is
about, is trying to cover up an electrical system that makes the cars "blow up". In addition the
Memo is about a news article in a real life situation similar to the movies lawsuit about the Toyota
car company.
I.

Reinforcement or change in the view

Producing at a big scale is harder to manage than a small business company. Everybody
knows that big companies doing mass production would have some defective products. Tests are
made to limit those defective products and it is also understandable for them to accept a little amount
of those. Nevertheless, reports are made to explain the importance of the defect. Through the movie
"Class Action" and then the reading of Toyota's case, it appears that some financial priorities are
taken over ethical priorities. Even if it is true that the difference between costs of recalls and
benefits of lawsuits are huge, 87.97 million of dollars for Ford's case, it is definitely against ethics to
act in that way. Evaluating the cost of a life at 200.000 dollars is already somehow unhuman,
because it relegates to put humans as objects.
II. Car design or manufacturers defect
According to the movie the defect was a manufacturer defect. A blanket circuit could lead to
an explosion in specific cases of collision. For sure the manufacturer would encounter bigger
trouble if it is a piece problem. The design could also be part of the problem but it is really hard to
say very precisely. Anyway, the main error was the blanket circuit, which could constitute the
strongest case than the design of the car.
III. Punitive Damages
According to the Legal Dictionary, punitive damages are those awarded in a lawsuit as
punishment and example to others for malicious or fraudulent acts. It is supposed to compensate for
the losses. I think that it could be justified in Class Action. The company knew that they were doing

26

something wrong and that it could cause harm and nothing was done to fix the problem or prevent it.
With that knowledge and the fact the no actions were taken I believe punitive damages could be
considered.
IV. The goal of the attorney and the guy in the wheelchair
The goal of the attorney was to prove that the guy in the wheelchair was too cautious. The
attorney made the man in a wheelchair eliminated as a creditable witness through making him admit
that he has been cited for being too slow while driving a car, and seeing a doctor that specializes in
car-phobia. If I was the attorney I would have at least gotten more information. She was clueless
about the story behind the lawsuit and just basically did what she was told, regardless of what she
should have done.
V. The missing document
The document that went missing was Dr. Gestalls notes on the electrical system of the car in
question. The notes stated that he knew, and tested his theory that the electrical system on the
blinker was garbage. The plaintiffs sought to place Michael Grazier the leading attorney on the
stand. The testimony went just as planned, Mr. Grazier said that he had never seen, or heard of the
document that went missing. The next witness, Andrew Cola proved that there was such a document,
and the whole case unraveled. At the end the car company settled on 100 million dollars.
VI. Reason why the company didnt want the case to go to trial
The reason Argo does not want to go to court because it is easier to deal with the plaintiffs
then to recall the vehicles said by corporate lawyer. The cost analysis was done and it would cost
them about 30 million compared to 50 million. There is also several other reasons why the case does
not go to court. Some of those reasons may include buying time, cheaper than litigation, faster than
litigation, and it avoids hostility. The advantages to mediation is its confidential, saves time and
money, avoids litigation, and it allows you to create your own solution. During the litigation the
lawyer was placed on trial and lied under oath. The advantages from negotiation, mediation, and
arbitration far outweigh the advantages of litigation.
VII. Liability for a product defect: Class Action vs. the Toyota lawsuit.
A. Class Action Movie
i)

Product must be in a defective condition when sold.

Before releasing the car on the market, Dr. Pavel tested the car and wrote a report stating that
the car was defective. As it appears, the defective condition of the car and its dangerousness was
known even before the products release on the market. It is so a fact that the defective condition
was present during the sales.
ii) Defendant must be engaged in selling that product.

27

The defendant, Argo Motor is the manufacturer of the car. The corporation is so, obviously
engaged in selling the defective product.
iii) Product must be "unreasonably dangerous"; product is dangerous beyond
ordinary expectation or less dangerous alternative not used.
Dr. Pavel study shows that the car was defective and presents weakness when turning left.
His study proved that the car present an important risk of blowing up while the car is moving left
and hurt. This blow up risk o makes the car dangerous beyond the ordinary expectation. Even the
firm considered this danger as beyond ordinary expectation since they have hesitated to recall the car
to finally decide to not do anything because it was cheaper to pay the lawsuit.
iv) Plaintiff must incur injury to self or property by use or consumption of the
product.
At the beginning of the movie, Tucker interviews his client. During this interview we can see
that he is in a rolling chair because he lost his two legs in the car accident. Moreover, he explains
that his baby died in the crash and that his wife has been injured too. Additionally, we can see his
psychologic trauma linked to this accident. In this case the plaintiff (Tucker's client) is so injured by
the use of the defective product.
v) Defective condition must be caused.
Dr. Pavel study clearly shows the defective condition of the product and the weakness of the
car. Even though we do not know if the damages have been caused by the explosion or only by the
accident itself, it can be argued that the defective condition of the car was at least a part of the
injuries' cause.
vi) Goods have not be substantially changed from time of sale
In the movie they do not state that the plaintiff's car has not be changed from time of sale.
However Tucker said that a hundred and thirty two (132) cars blew up. We so may argue that the
defective cars have not been substantially changed from time of sale since it is not a really common
practice.
B. Toyota Lawsuit
Toyota recalled "8.5 million vehicles over safety concerns" which makes clear that the cars
have been sold in a defective condition.
Many lawsuits arose due to the defective product. Most of them were buyers against Toyota
which makes it obvious that the defendant was engaged in selling the defective product.
Toyota's cars present break problem and accelerator pedal might stick which make cars
accelerate by themselves which is definitely dangerous beyond ordinary expectation.

28

VIII. Provide your overall assessment of the movie in light of your readings and personal
experience.
The movie and the reading give an understanding of how some business will allow their
customers to be in unsafe vehicles to be more profitable. The analysis of personal injury settlements
to recalling vehicles should have never been done. This is an unethical business practice and gives
the business bad PR (Public Relation). The bad PR has a loss associated with it as well as the
financial loss. The practice of good business ethics pays off in the long run regardless of the
forecasting involved. If the companies would incorporate more of a Utilitarianism outlook
compared to a Free Market outlook.

29

MEMORANDUM
To: Joseph Lakatos
From: Florian Zunino, Yannis Chalindar, Amanda Bowen, Adam Hambleton & Nathaniel Slack
Date: 03/06/14
Re: Taking the Plunge
______________________________________________________________________________
EXECUTIVE SUMMARY
Who never ask himself at one moment "should I do it or not?". This is the case of David
Shrank in this paper. Being an employee at IBM is not enough for this man always seeking new
opportunity. Is he gathering entrepreneurial traits? Through this memorandum, we will review his
profile and analyze his decisions about launching his "New Luxury Venture" called Pup Cups.
I.

David Shrank is an Entrepreneur

Entrepreneurship is defined as "the pursue of opportunity without regard for initial

resource" (ENT201). Through this reading, Shrank's experience seems to fit this definition. In fact,
since high school he accumulates a lot of business experience through different entrepreneurial
projects such as his summer kiosk or T-shirt business.
Furthermore, David Shrank gathers several personal skills defining entrepreneurs. As it
happens, he looks for opportunities, tries to reduce risks while accepts some of them. He also has a
strong need to achieve, a wish for independency and strong idea implementation skills. In other
words, Shrank seems to correspond to the entrepreneur definition.
Additionally, he acquired a lot of business skills and knowledge during his education such as
his master in business administration and from his experience by leading his own businesses. Indeed
by selling items on the beach during summer, Shrank acquired many know-how. He did errors and
also learned from them. As well as being a small entrepreneur, he experiments corporate employee
lifestyle at IBM, Accenture and FreeRide.com. Both of those experiences are important to create a
strong entrepreneurial mind.
Actually, there is not real "stuff" to be an entrepreneur. Entrepreneurial mind comes from
anywhere and corresponds to any kind of background. Someone with learning difficulties such as
Richard Branson can become a really successful entrepreneur. It is not a question of skills,
knowledge but a question of willing to achieve, motivation and hard-work. However, study has
shown that successful entrepreneurs present common personality and skill dimensions such as
Independency, Passion, Risk Acceptance, Need to Achieve, Future Focus, Idea Generation, SelfConfidence, and Persistence. All those skills are set through experiences and education.

30

II. Venture Idea Behind New Luxury Ventures

The idea behind New Luxury ventures is to provide exclusivity. To target Luxury markets,
entrepreneur has to come up with idea providing exclusivity to their customers. In fact, "rich" people
want to differentiate themselves by having goods that other people cannot not afford.
David Shrank idea is to provide a disposable water cups for dogs to drink outside. He targets
the luxury market since it is a good that normal people will not be willing to pay for. By analyzing
the market, Shrank has determined the humanization of pets and out-of-home categories. He also
identified a possible need for rich dog owners willing to pay more to provide more comfort and
humanize their pets.
III. Transform an Idea Into an Opportunity
As a matter of fact, every human generates ideas. However, to know if an idea might become
an opportunity, some steps are required.
The first step is to write it down in order to make it concrete and remember it. It would also
be helpful to think about it more in depth. The second step is to evaluate this idea. It is about the
feasibility of this idea technologically, humanly, etc. In the case that the idea is reasonably realizable,
then comes the market research. This process aims to gather information about your future market to
have an overview of the profitability of your idea. By analyzing primary and secondary researches,
an entrepreneur would be able to build accurate previsions about his future venture. After completing
this step, the entrepreneur should be able to state if his idea is an opportunity or not.
Subsequently, the entrepreneur should be future focus and find out if he will be expand to
other market or increase his portfolio. In fact, only few businesses may survive with one product or
service.
Finally, to pass from an idea to the opportunity, entrepreneurs have to set up an
implementation plan and implement the idea. Without making it real, an idea will always still an idea
if we do not act and implement it.
All of those steps make an idea to become an opportunity. It allows to perceive if there is a
set of circumstances that make your possible to do.
IV. Making the Plunge Decision
Among every decisions, rarely risks are inexistent. Taking the "plunge" is a personal decision
that we make according to our risk acceptance. This feeling of acceptance can be driven by different
criteria such as a need of money, a need to achieve, a passion, and so. To analyze the market and

31

create a business plan based on the results would help to highlight where the risks are and thus to
may be find another way to limit them.
Finally taking the plunge or not is a matter of personal degree of risk acceptance, but being
well informed about all the situation would help to make that decision.
V. Making this Venture Happens
What is it going to take to make this venture happen? Outline the steps that David Shrank
must take in order to take the plunge (this includes all we have discussed thus far; give Shrank sound
advice)?
Most of all, to make a venture happen, you need to be fully involved in your idea. First a
deeper identification of the market is required. Information collected are about pets in general but
not really about dogs. Moreover a survey and interviews should be good ways for respectively
primary and secondary researches. Once results gathered, analysis should be done as precisely as
possible. By this way a first rank of feasibility is kind of measurable and the target market becomes
well defined. Thus, needs to achieve are also identifiable. Meaning that a second rank of feasibility
can be made according to those needs. Primary finance assumptions would allow to evaluate risks on
doing this business. At this point, it would be up to David Shrank to make the decision of taking the
plunge or not.
VI. Success and Failure
As it appears, both success and failure are subjective. In fact, success is about reaching the
goals you set while failure is about missing to reach them. However, for a same project, two persons
might have different goals. For a new venture, one goal could be to sale a certain amount of units,
incorporate the business, break-even or only please the customer. What count as a success for one
could count as a failure for someone else.
David Shrank's main goal might only be to leave his corporate employee life to be his own
boss. If it is the case, Pup Cups can already be counted as a success for him. However, make as
much money as he did while working for IBM with this business would be a good goal to reach and
so, a success.
CONCLUSION
Being an entrepreneur is a work by itself. As it appears, entrepreneurs come from totally
different background, education or lifestyle. While taking the plunge, some steps are required to
decrease the chance of failure. One of the most important would be to recognize when an idea is an
opportunity but after this step, the most important is hard

32

work, motivation and courage to implement the business passing from an idea to an
opportunity and finally come up with a new venture.

33

MEMORANDUM
To: Joseph Lakatos
From: Adam Hambleton, Nathaniel Slack, Amanda Bowen, Yannis Chalindar & Florian Zunino
Date: 03/04/14
Re: Wacky Memorandum

____________________________________________________________________________________

EXECUTIVE SUMMARY
Bugs and Daffy own a S-corporation called Wacky Advertising, Inc. The S-corp is
profitable with a net income of $1.5 million on a $18 million revenues. However, Wacky
Advertising, Inc would like to compete with DoubleClick and need to raise money to reach this goal.
Daffy and Bugs want to restructure their S-corporation to raise more money now and in the future.
They would also like to limit their private exposure and liability. Finally, they have a lack of skills
and would like to compensate it using corporate structure but they also want to keep the control over
Wacky Business.
I.

Analysis of the Situation

As an S-corporation, Wacky Inc. is a pass-through tax entity. Thanks to this, Bugs and Daffy
as well as the other shareholders of Wacky Inc. are not subjected to the double taxation (since there
is no taxation on the corporate level). The advantage of the S-corporation form of business is that
shareholders have limited liability.
However, the S-corporation form of Wacky Inc. limits its development since the maximum of
shareholders is limited to one hundreds (100) and cannot include foreign investors neither other Ccorporations. Additionally, only one class of stock can be issued which means that all the investors
have to be on the same class.
Bugs and Daffy are so, looking for a type of corporation with which they will be allowed to
have more shareholders including other C-corp and foreign investors. They are looking for a type of
business entity in which they will keep the limited liability of shareholders. At the same time, they
would like to keep the control of the business and do not want to expose their private life.
II. Proposed Solution
Our group advises Daffy and Bugs to switch their S-corporation to a C-corporation. In fact, a
C-corporation will allow them to increase the number of shareholders (passing from a limit of o
hundred to an unlimited number). They will also be allowed to issue different types of shares and
bonds and accept foreign investors. C-corporations and other types of business will be allowed to
invest in Wacky, Inc which providing a better funding now and in the future. Other advantages of a

34

C-corporation are that Bugs and Daffy will be able to limit their liability, but also hire head officers
to balance their lack of business skills.
We also advise them to not being public but still a private C-corporation. Being a private
corporation will protect Bugs and Daffy privacy. In fact, since the issuing shares are not sold on the
public market, the SEC will be less regarding about what happens in their life. Being private will
also be cheaper and avoid a lot of SEC filling requirement even though they will still have to fill
Wacky, Inc to become a C-corporation. Being a private C-corporation will be simpler to manage than
a public one. Even though they might not find as much investments than if they fill as a public Ccorporation, shift form a S-corp to a private C-corp will for sure increase the external investments.
And it is the best way to keep Daffy and Bugs privacy and responds to their requirements.
Other types of business such as Limited Liability Company, Limited Liability Partnership,
Limited or General Partnership or Sole Proprietorship will not provide enough funding to compete
with DoubleClick since it would be harder to find partners or raise personal funds to increase Wacky
Advertising, Inc investments. In fact, to compete with its competitor, Wacky would need millions of
dollars and the only effective way to raise this amount of money would be to issue share which can
be made only through corporation type of business.
CONCLUSION
Bugs and Daffy own a S-corporation called Wacky Advertising, Inc. Since they would like to
compete with their competitor, they need more fund and investments. However, they would like to
keep the control over their company, limit their private life exposure and liability. To answer those
requirements, we advise Daffy and Bugs to shift from a S-corporation to a private C-corporation and
use protection method such as the private pills to respond effectively to a business takeover and keep
the control over their business.

35

MEMORANDUM
To: Joseph Lakatos
From: Florian Zunino, Yannis Chalindar, Amanda Bowen, Adam Hambleton & Nathaniel Slack
Date: 03/05/14
Re: The Social Network
______________________________________________________________________________
EXECUTIVE SUMMARY
The Social Network is a movie that tells the tale on how Mark Zuckerberg created Facebook
and the journey that unfolded growing it to a billion dollar business. The movie has plenty of
business decisions, both good and bad, that Mark and others around him made in order to create
Facebook. Mark faces some ethical decisions as well, and the movie shows how his decisions
affected the people around him. Much of the decisions include word of mouth contracts, employee
agreements, plus the importance of patents, non-compete agreements, and non-disclosure
agreements.
There are viable business ethics and lessons that can be learned from the movie as well. Mark
Zuckerberg did not foresee the importance of verbal contracts. He didnt have a good sense of ethics
either; He learned the hard way that not being ethical in this country does not necessarily pay.
Edwardo learned the importance of reading contracts before you signed them, and not putting
yourself in a situation that may come back to haunt you. The Social Network gives an insight on
what could happen if you ignore ethical business practices and inquire on other resources that can
help to protect you when creating and maintaining a business.
I.

Entrepreneurial Traits
A. Common traits of successful entrepreneurs

Some common traits of successful entrepreneurs include: independence, preference for

limited structure, nonconformity, risk acceptance, action orientation, passion, need to achieve, future
focus, idea generation, execution, self-confidence, optimism, persistence, and interpersonal
sensitivity.
B. Discussion of the Traits of Mark Zuckerberg (MZ)
Mark Zuckerberg is a very intelligent individual. He is very passionate and determined and
he also has a great sense of urgency. However, he is also confident, which often comes off as
conceited and arrogant, and he is very passive aggressive. He is very business minded and he is
always very focused on what is going to happen next. MZ does exhibit some of the successful traits.
He has a risk acceptance and he is action oriented, in that he shows initiative and makes decisions
quickly. He is very passionate and has a need to achieve. He is focused on the future and what is
coming next and is good with generating ideas. He was very self-confident, he knew what he was
doing and he knew that he was doing it well and he was also able to turn his ideas into an actionable

36

plan which the Winklevoss struggled with. I did not agree with the arrogance and the way he used
people. He worked his way to the top, but he stepped on a lot of people to get there and although it
helped in his success I think it also hurt him in a lot of ways.
C. Discussion of the Traits of the Winklevoss Twins (Twins)
The Winklevoss Twins, like MZ, are also arrogant and conceited but in a very different way.
They come from old money and their father has many connections throughout Harvard and the
community. They were very open and trusting with their idea and they were oblivious to the fact that
MZ had deceived them. They were book smart, but when it came to the business world they had no
idea what they were doing. They were used to things going their way and when Harvard
Connection did not work out they were very resentful. I feel like they were limited because they
were not open-minded. For example, only keeping Harvard Connection in Harvard because of its
exclusiveness, but there was so much more to do with the idea.
II. Ideas to New Venture Creation
A. Comparing the ideas of MZ and the twins
MZs ideas were different from the Twins ideas because they were stuck in their own little
world at Harvard compared to MZ seeing the big picture. The Twins did not launch this idea they;
therefore, they never put it in concrete form. MZ was successful because he launched his site and put
it into concrete form. The Twins did not make MZ sign a Non-Compete To keep him from creating
his own social networking sight and lunching it so quickly. MZ showed that when competing for
gold it can be useful to keep your friends close and your enemies closer. MZ was able to see how
valuable this could be, by seeing the big picture.
B. Can the idea become a successful business
One way to see if an idea is going to work in the business world is to test it. MZ does a great
job of this using Face Smash. Face Smash showed how viral a social interactive site could go viral.
MZ crossed ethical and confidentiality line to get there. He noticed a market for The Facebook
while the Twins only saw the Harvard Connection as a way to get in with the ladies. They thought
of the Harvard Connection as an exclusive site that only Harvard students could be a part of. The
Facebook was a way for people all around the globe could communicate.
III. Intellectual property
A. Did MZ violate intellectual property law
Mark Zuckerburg did not violate intellectual property laws. He did not use any of the twins
source code, and the twins did not place the idea into pen and paper. The twins did not create
Facebook, if it was their idea, then the question must be asked: why didn't they create it? The law
only protects works if they wrote it down; if they had the entire source code that was used to create
Facebook and could have proven they created it first, they would have a different story.
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B. Non-Compete/Non-Disclosure agreement
If the twins would of have made Mark sign a non-compete, or a non-disclosure agreement,
they would of been the ones on top. The non-compete agreement would of prevented Mark from
competing with them. The non-disclosure agreement would have prevented Mark from taking their
idea in the first place. If Mark would have signed these agreements, he wouldn't have been able to
tell anyone of their idea, use their work in anyway, or be able to successfully compete with them.
The twins were clearly upset because they felt that Mark stabbed them in the back.
C. Did MZ act ethically in the creation of the Facebook
Mark clearly did not act ethically in the creation of Facebook. He took the twins idea, and
stabbed him in the back, betrayed his best friend whom he hand-picked to be CEO, and engaged in
other bad business practices. The twins came to him asking for his help in the development of what
they called "the Harvard Connection", and he took their ideas on the perfect social network, and
placed them in Facebook. He did this after agreeing to help them, and then deliberately ignored them
about the issues he encountered. . An ethical person would either say no thanks, or incorporated
them with the creation. Even if it was not what they envisioned, it did stem from their idea, and
should have had some part or say on where it went from there. He should of never betrayed his CEO
like that either, he was the funding source that allowed for Facebook to expand, an ethical person
would of kept his shares up so that they were not diluted to the point of none existence. If he would
of been even a little more ethical, Mark would of been in better shape.
IV. Partners/Peers
Shawn Parker was deceptive and manipulative. He knew the power that he could have over
Zuckerberg and he took advantage of it. He had prior success, but with that success also came a lot
of failure. After his history with Napster and getting kicked out of his own company, I would not
want to work with him. I would not be able to trust him and even with the knowledge and skills he
has I do not think it would be worth it to me to have someone I did not trust. He brought the cool
effect to Facebook, and even suggested that Zuckerberg drop the the to make it just Facebook.
He also had connections and was able to help bring in investors. However, he had a bad reputation
from his lawsuit and his drug problem. He was deceptive and manipulative and he was selfish and
only looking out for himself. He knew that Facebook was going to be a success when he saw it and
he had to find a way in.
V. Corporate culture
Culture in the work place is extremely important. You should have people who fit within the
culture of your business. All businesses have a different culture and is usually determined by the
owner or board though the mission statement. For the most part the business culture is maintained by

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people who have the same vision, or could get along with their employer. Culture in the workplace
allows a more productive workplace because everyone gets along.
Ethics does play a role in in the workplace culture. It almost goes hand and hand, if the
manager gets along with the workers, and the workers get along with each other; chances are they
use the same ethical structure. Employees should treat others in the way they ethically see fit. If you
have half the staff thinking one thing is ethical, and another something different, then it's going to be
like congress, they won't get anything done because they are more interested in arguing with each
other. If you don't have a set ethical structure then you will have chaos. With this we can conclude
that Ethics does play a major role in the culture of the workplace.
VI. Employment Agreements
A. Lessons learned from verbal agreements
The biggest lesson that I have learned from using a verbal agreement between founding
members in a business is to always get things in writing. Eduardo Saverin should have placed a
contract in front of MZ before he placed $17,000 into MZs hands. The second lesson that I learned
was that you could not trust anyone in business especially your friends. The third lesson that I
learned is that you dont go into business with your family or your friends.
B. Different approach to verbal agreements
The only thing that I would do differently regarding the verbal agreement would be to record
it. I would record the conversation having MZ state his full name along with a witness to verify that
he was receiving 30% of The Facebook company. I would use the verbal agreement as a way to set
the stage for a contract to be signed only.
VII. Company Growth
A. Difference between MZ and Eduardos approaches
MZ made the chose not to monetize the company for a few reasons. One reason because
The Facebook was not defined yet and they have not clearly defined how to market The
Facebook. MZ did not exactly know what it was. He said to his CFO Eduardo Saverin that The
Facebook was cool. He did not was to dilute the sight with advertising while it was growing so
quickly. His newly found investor Shawn Parker agreed with MZ, stating Its like putting a college
party on a curfew for 11:00 pm. The approaches did have to be mutually exclusive. I think could
not grow The Facebook as fast by relocating their attention to drawing in advertisers. The
Facebook need a many consumers a possible and diluting the site with adverting would have
slowed down the global spread. The options in the move were to sell space on The Facebook for
revenue and MZ declined through neglecting to pay any attention to the possible client. The right
thing to do was to continue to spread The Facebook as fast as possible until the percent of growth
declined and then offer the advertising to the highest bidder.

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CONCLUSION
There are many lessons to be learned from the The Social Network. The Facebook story
really allows us to experience the struggles of starting your own business. It teaches us the
importance of knowing who you are doing business with and who you can trust. It also illustrates to
us the value of protecting your own work and ideas, as well as the value of ethical decision making.
Mark Zuckerberg and his business partners open us up to the reality of the business world.

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