Issue- Organizational Environment

Fantasia has been a conceptual artist for the past 15 years. She operates her small business under the name "Fantasia's Phantastic Fancies" out of a workshop in the SoHo area of Manhattan and makes custom pieces that appeal to an "artsy" market. Although her customers are mostly young, they are affluent and willing to spend money for unique, high-quality items, so "FPF" (as it's commonly referred to) products command a premium price.

Currently, Fantasia's art objects are produced in one workshop in SoHo and sold in only three locations in the U.S.: New York City; Chicago, Illinois; and to a limited market in Berkeley, California (Fantasia is a UC Berkeley graduate). Production is approximately 1,000 pieces per year, with prices ranging from $550 - $9,500 (and sometimes more) per item. The items are produced in quantities ranging from single, made-to-order, one-of-a-kind designs to limited-availability items of no more than 50.

After Fantasia appeared on a popular cable television reality show, "Battle of the Avant Gardeists," her designs gained instant national recognition. Even though she was one of the earlier contestants to be "fired" from the show, the publicity resulted in many fans for FPF designs. Now, people across the country want to have FPF pieces in their homes.

Fantasia has been approached by a big design industry investment firm that is willing to fund her expansion. They have told her that, despite the bad economic conditions, they believe now is the time for her to expand to take advantage of the television boost to her popularity. In addition, they believe that there is now demand for her pieces in markets outside of the U.S. Since design trends are often fleeting, the investors advise Fantasia that she should "go big now" and try to capture as large a market share as possible. Of course, she would have to produce items in larger quantities and sell them at lower prices to do so. Fantasia is used to running a small business, but all of this production up-scaling talk is new to her. She knows the company will have to invest in more trained staff and production equipment to meet the increased demand.

Fantasia has hired you to give her advice about how she should proceed.

Answer the following questions about FPF. Be sure to state clearly any assumptions you make about the organization as part of the description of factors to consider and state the reasons for including each factor. Use organizational structure language and theory in your response.

• In deciding whether or not to produce larger quantities, what factors should Fantasia consider?
• What specific recommendations do you have for Fantasia?

Issue - Business Associations, Agency, and Torts

You plan to open "X-Flies," a full-service drone pilot training center for extreme flying hobbyists. You currently have $50,000 available. You estimate you will need $100,000 to start and operate the center for 1 year. You also estimate you will need $50,000 a year for re-investment, assuming no growth. You plan on being the sole owner if possible, and having two managers: one for the technical side and one for the business side. You are well known in the community and could obtain a loan since you have successfully been in business before. You could also find people to invest in your center, but you don't like the idea of losing control. You have already started finding suppliers and buying equipment for your new venture. Your friend, Fonzie, has agreed to do much of the footwork, in terms of applications and filings with the relevant government agencies, for a fee. So far, all has gone well except that last week Fonzie forgot to set the brake on his van while dropping off a check to the printing firm that's doing the marketing materials for your new venture. Fonzie's van rolled down a hill and crashed through six feet of redwood fence fronting a local landscaping company run by an old friend of yours, Trisha. Trisha's told you that, because of Fonzie, you have really put her in a bind, as now she has to pay to fix the fence even though business has been terrible for the last few months and she is short on income. Now, with a shabby-looking front fence, she fears she'll get fewer walk-in customers. She's asking you to pay for the fence damage.

Use the above fact scenario to answer the following questions:

1) What form of business should you choose for X-Files, and why? Justify your choice in relation to the other reasonable alternatives available to you.

2) Are you and/or Fonzie responsible, legally or ethically, for Trisha's fence repairs? Explain why or why not.