Real-World Business Situations This page is dedicated to highlighting a few relevant, interesting,
or significant business articles in the local, national, and international
media. In each article, there is a lesson to be learned; pay close attention to how companies
address and adapt to changes in their environment. In addition,
wherever possible, try to apply each lesson to your own company. Would you have taken the same action? Would you have done something different? If so, what? Most importantly, what can you learn about the situation that you can apply in your own company? For any assistance in determining how any concept highlighted on this page relates to your own business, feel free to contact us. Be sure to check back often for more recent articles! | |  |
Contract Employee Sues Employer For Cause
(From the Austin American-Statesman, 9-4-08)
Using a contract worker instead of a regular employee is a practice in which several employers have participated. The laws covering the definition of each class of worker are very detailed and stringent. If your business model allows for you to use contract workers and stay within the bounds of the relevant employment laws, the practice can be beneficial to your business from the standpoint of cost-effectiveness. However, be aware that you have to be absolutely certain that you explicitly spell out all terms of employment, especially with regard to which party is responsible if the contract worker is hurt on the job.
This article describes a potentially messy, but predictable, situation that has developed at an oil refinery in Baytown, Texas. A contract worker was badly hurt on the job, and is now suing the company for damages resulting from his accident. Regardless of the outcome of the legal action, this will be an expensive legal battle for both sides; the burden of proof will in all likelihood be on the oil refinery to prove that it is not financially responsible for the injuries suffered by the worker.
Lesson Learned: In some situations, using contract workers can be an effective method of reducing labor costs. However, note that 1) the employer is responsible for knowing the laws that apply to each category of worker, and 2) there needs to be explicit documentation detailing, among other issues, who is responsible for Workers' Compensation coverage in the event that the worker is injured on the job.
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Severe Penalties Meted Out To Employers of Undocumented Workers
(From the Chicago Tribune, 8-28-08)
This article highlights a problem that exists among employers in the US who seek to circumvent the laws of immigration. For years, some employers have tried to control labor costs through the use of workers who cannot provide proof of their immigration status or their right to be employed in the US legally. If you as an employer are guilty of this practice, it is advised that you pay attention to the penalties for circumventing immigration laws; in this article, the 2 responsible employers/supervisors are facing jail time and fines. And the magnitude of the penalties is staggering- 5 years and $250,000, and 10 years and $500,000 respectively.
Lesson Learned: It is incumbent on you as a business owner to control all costs, and labor costs are usually among the most significant. However, controlling your labor costs has to be done in a legal manner; your work force cannot be comprised of employees who do not have the legal right to work in this country. If you do this as a matter of practice, do not be surprised if the Immigration and Naturalization Service (INS) eventually knocks on your door.
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Whole Foods To Cut 49 Jobs In Austin
(From the Austin American-Statesman, 8-14-2008)
One of the opportunities for a business owner to show his mettle is how s/he reacts to challenging external factors. In this time of economic downturn, Whole Foods has made the always-difficult decision to reduce its overhead by eliminating 49 positions at the company's headquarters here in Austin. While making the decision to reduce a work force is always a difficult one that can throw several families into upheaval and financial distress, it is an unfortunate reality of trying to keep a business viable during times where external conditions can make life challenging for a business owner.
Lesson Learned:
Reducing a work force is never an easy decision to make, but it is
sometimes necessary to maintain a business that is profitable in the
long run. Be empathetic and mindful of the displaced employees'
well-being; this is one of the most difficult and far-reaching
decisions that you will have to make as a business owner.
McDonald's To Change Dollar Menu
(From MSN Business Page, 8-5-2008)
This article highlights one of the most basic concepts of which a successful business owner has to be aware. With the ever-increasing costs of doing business brought on primarily by a world in which crude oil has recently exceeded $145/barrel, the management team at McDonald's has decided to de-emphasize certain aspects of the Dollar Menu, a very successful promotion introduced by the fast food giant in 2003. Instead, McDonald's will be looking for different ways to generate their stated goal of $125,000 in additional revenue per store.
Lesson Learned: every business owner needs to conduct an ongoing review of the cost of doing business, and take appropriate action to mitigate the effects of increasing costs. Direct and indirect costs (overhead) need to be monitored constantly, to ensure that the company's profitability goals are not being compromised.
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Competitors Seek To Differentiate Themselves From Starbucks
(From Business Week, 7-18-2008)
Ever feel like the lowest person on the totem pole? You should, if you were the owner of an independent coffee shop in the last several years. Starbucks has dominated the $6 coffee market for some time now. However, an interesting thing has happened in the last several months; Starbucks has realized that it probably grew too big, too fast, and is now taking steps to reduce the negative consequences of that rapid growth. And who stands to potentially gain from this strategic shift in Starbucks' policy? The independent coffee shop owner.
Lesson Learned: In as many ways as possible, focus on what you do well, and carve out a niche in your market. You may be able to capitalize on an opportunity when your larger competitor mis-steps.
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