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The company We-Guessed & You’re-Wrong (WGYW) is headquartered in Las Cruces and is run by four partners. Currently, WGYW works with sixteen customers (four customers per partner) assessing the future of their ventures with the help of data mining software. As a result of a successful expenses reduction program, WGYW now makes $1,152,000 per year with its annual profit before tax being $702000.
With the growth of the business, new opportunities arise for WGWY. The following proposals have been made: to accept a new partner or, alternatively, to create an associate program for three NMSU engineering graduates; one of them would be expected to become a new partner upon gathering at least one million dollars. Both opportunities have strong and weak points that are going to be discussed in this paper, and a recommendation concerning the future of WGYW will be suggested.
The Evaluation of the Alternatives
Both opportunities require certain “inputs” (in the form of financial investment or the investment of effort) and promise to produce particular outputs.
First of all, the company’s expenses are bound to increase with the new workers. However, the scope and guidelines of the program are expected to change depending on the level of knowledge and learning capabilities of the graduates.
Most certainly, the graduates would be expected to demand fewer expenses than an average partner and bring little or no profit at the beginning; with time, both the expenses and the profit should increase as the graduates engage in more business trips and manage to service more customers. The costs of developing and implementing the program will also increase the expenses connected to this alternative.
In general, the costs and profits of the graduates are too questionable at the moment and are expected to change at an uneven, possibly, customized pace which is why they are not calculated here. A new partner would come with a $1,000,000 in cash and would be expected to become a full-fledged partner immediately. This means that the costs will increase by about $95,000 per year ($90,000 trip expenses and $5,000 equipment expenses), and the revenue will increase by $288,000 ($6,000 per client per month) annually. Therefore, the partner will bring the company an average of $193,000 per year.
As it has been mentioned, the development of the program requires investments in the financial form and the form of efforts. It would definitely include the steps of recruitment and education; the education process would most certainly require customizing and regular assessment.
However, it should be mentioned that a similar input is necessary for the other alternative, as well. Preparing the partnership would require changes (at the very least, in the partnership agreement, although, most certainly, the revision of the strategy and plans would also be required), which will demand the input of efforts at the very least (Steingold 46; Clifford and Warner 80-82).
The process of “recruitment” or, rather, assessment of the candidates is also likely to be complicated; it is of particular importance to plan and negotiate the place and role of the new partner before including him or her in the company (Clifford and Warner 81-82).
It should be pointed out that there are risks connected to the recruitment of the new staff (inadequate development, lack of motivation, relationship issues), and it will be necessary to mitigate as many of them as possible at the stage of recruitment (Loader 95-97).
This problem, however, is general for both cases: the choice of the new partner or the associate program participants requires a thoroughly developed recruitment procedures. Apart from that, it should be mentioned that the choice of a new partner is correlated with higher risks; therefore, it requires a particularly vigorous evaluation of the alternatives (Clifford and Warner 80).
However, this fact should not automatically rule out the possibility of a partnership. In fact, it is well-known that even family-operated businesses (like Market Basket) can be split by feuds (Ross par. 1-5).
Therefore, while decreasing the control that the partners have is undesirable, it will not necessarily bring negative results while retaining it does not guarantee the lack of difficulties. The resources spent on risk management are another input factor.
Apart from that, it should be pointed out that the three graduates would be expected to be much more motivated than the partner. Motivation is especially important with respect to human resources; it affects numerous aspects of the working process, including performance, job satisfaction, loyalty, and the desire to learn and develop the business (Sistare, Shiplett, and Buss 15, 137; Wilson 164-165, 222).
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For the graduates, the prospects are extremely enticing: the chance of becoming a partner should be enough to motivate them to compete and develop. It should also be noted that the competition between the graduates should be kept healthy; in general, their personalities should be taken into account as well as their knowledge, skills, and creativity.
This aspect is conditioned by the fact that the program is a marvelous opportunity of gathering a sufficient amount of information about the future partner. All the aspects of the graduates’ work, all of their strong and weak qualities, would be assessed, which can be regarded as another input of efforts. Still, these actions would ensure proper evaluation of a potential partner, which, in turn, can be regarded as a valuable output of the program.
In the case of the partner alternative, the information will be much more limited; at the very least, the information concerning the ability of the partner to work in the company and with its staff will be lacking. In this case, the new worker will be an alien element to the company while a graduate would have become its part by the time of becoming a partner.
The output of both opportunities is concerned with the benefits generated by human resources. The human capital (knowledge, skills, experience, ideas) is among the most important assets for businesses, and WGYW is not an exception (Sistare, Shiplett, and Buss 77, 88).
A partner is expected to possess both skills and experience; it is not ruled out that he or she would bring new technology or methodology. In every respect, a partner possesses more initial capital than the graduates who lack experience and, therefore, skills. Their capital is to be developed by the company with the help of the program, and with time, they can become high-class specialists.
However, the graduates also offer a human capital output, that is, the ideas and knowledge generated by three people (as opposed to those provided by one person, a partner). Given the fact that knowledge, both tacit and implicit, is an especially valued asset in the post-industrial world, this kind of output is especially valued (Wilson 131; Child et al. 289).
Therefore, as has been mentioned, both opportunities have advantages and disadvantages that should be considered in the context of a particular business. Apart from that, the personal preferences of the business conduct of the partners can be considered. The following section contains the personal opinion of the author of the recommendation.
Creating the program for the graduates requires more resources and expenses, both in the financial form and the form of efforts, than the acceptance of a partner. The eventual output would be expected to be greater than that of partnership, even though it is not assessable due to the relative intangibility of the potential inputs and outputs of the three extremely motivated employees.
The primary advantage of partnership consists of the fact that its benefits are much more concrete and can be received almost immediately. The primary difficulty connected to this alternative lies in the fact that it is a “big” decision, and the chances of it being insufficiently informed are rather high.
Indeed, in case the future partner works with the company as an associate, the time will be sufficient for the assessment of all the work-relevant qualities, including the character traits that could affect performance or communication and the level of coordination and collaboration that we can achieve within the environment of our business.
We realize the extent of the input that would be necessary for the program, but we believe that our company can afford it; what it cannot afford is an unreliable partner. This argument is the one that makes us regard the alternative of the program as a much more attractive one.
Child, John et al. Cooperative Strategy. Oxford, United Kingdom: Oxford University Press, 2005. Print.
Clifford, Denis, and Ralph E Warner. Form A Partnership. Berkeley, California: Nolo, 2012. Print.
Loader, David. Fundamentals of Global Operations Management. Hoboken, New Jersey: John Wiley, 2006. Print.
Ross, Casey. “Market Basket board votes to distribute $250m to owners.” Boston Globe, Web.
Sistare, Hannah, Myra Howze Shiplett, and Terry Buss. Innovations in Human Resource Management. Armonk, New York: Sharpe, 2009. Print.
Steingold, Fred S. Legal Guide for Starting and Running a Small Business. Berkeley, California: Nolo, 2015. Print.
Wilson, John. Human Resource Development. London, United Kingdom: Kogan Page, 2005. Print.