Discussion Topic: Partnership Agreement

Just like in any type of business organization, ethics in partnership is important because of the difficulties that two or more persons have in arriving at a common decision. Partners are under constant pressure to protect their investment. After reading the Ethics Case on pp. 604-605 of your text, discuss the following:

1. Who are the stakeholders in this situation?

2. Identify the problems with Alexandra's actions and discuss the ethical considerations of her actions.

3. How might the partnership agreement be revised to accommodate the differences in Alexandra's and Kellie's work and withdrawal habits?

BYP12-4 Alexandra and Kellie operate a beauty salon as partners who share profits and losses equally. The success of their business has exceeded their expectations; the salon is operating quite profitably. Kellie is anxious to maximize profits and schedules appointments from 8 a.m. to 6 p.m. daily, even sacrificing some lunch hours to accommodate regular customers. Alexandra schedules her appointments from 9 a.m. to 5 p.m. and takes long lunch hours. Alexandra regularly makes significantly larger withdrawals of cash than Kellie does, but, she says, "Kellie, you needn't worry, I never make a withdrawal without you knowing about it, so it is properly recorded in my drawing account and charged against my capital at the end of the year." Alexandra's withdrawals to date are double Kellie's.