BM1803

TASK PERFORMANCE
Members: Date: Score:

Section:

New Venture Suffers from Unmet Partner Expectations: A Case Study

George and Nora are partners in a new gourmet food store in an upscale Washington D.C. neighborhood. The store
was starting to gain traction after a rocky first year but their inability to communicate was making it hard to take
timely action and they worried that they were missing out on critical opportunities. They agreed that mediation was
the best course to try to resolve their issues.
Partnership Background:
The partners met and became friends in business school almost 15 years ago and had remained friends since then.
They both had experience as management consultants, but neither had run a retail store. Nora had been in a business
partnership previously that had ended very dramatically, and expensively, and was sensitive that this partnership did
not end as that one had.
They had decided on a 50/50 equity split though George contributed over 70% of the start-up capital. He planned to
keep his job as a partner in a management consulting firm, and Nora would manage the daily operations of the store
and keep some of her own consulting clients on the side. He took on the role of CFO and Nora was COO.
A year in, the store launch was over-budget, they were having issues with inventory management and staffing, and
both felt unable to communicate their concerns as attempts were often met with defensiveness on both sides. One of
the store staff was now running interference on their communication; something both of them knew was a bad idea.
Some details:

 Nora felt that her work at the store had become all consuming, much more than expected, and wanted
additional equity to compensate for lack of salary. George agreed that Nora was much more engaged in the
store, but saw that as part of their deal and felt her management-by-crisis led to the financial distress in the
company.

 They were going to need another capital infusion to continue, and George was reluctant to do this without
resolving their work issues.

 George had always seen Nora as incredibly competent and was surprised by how much support and input
she needed in managing store operations. He had seen his role as contributing capital, monitoring finances
and thinking strategically, and given his demanding job that was all he felt able to do.

 Nora valued George’s advice; it was the most valuable thing she thought he brought to the business. His lack
of responsiveness, sometimes not responding to her texts for days, left her without support in dealing with
day-to-day decisions, but then second-guessed when it came to the financial implications.

 George was sometimes late with financial reporting which Nora felt made it hard for her to manage
inventory and plan appropriately, which affected sales and customer service.

 They both were concerned that they did not interact as friends at all anymore and the business had taken
over their entire relationship.

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Questions (3 items x 10 points):

1. What are the main partnership issues in the case?

Answer:

2. Given the issues presented in this case, do you think the partnership is still a preferable form of business
ownership? Why or why not?
Answer:

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3. If not a partnership, what form of business organization would you like to recommend to the two? Defend
your answer.
Answer:

Group Case Analysis Grading Rubric:

Categories Performance Criteria Total Points

The information is clear and based on the case study. 7
The thought development of the answers is clear,
Answers to Case Study 1
logical, and consistent.
Answers are well-elaborated based on the concepts and
2
theories discussed relative to the topic.
TOTAL 10

REFERENCE:
New venture suffers from unmet partner expectations (n.d.) Retrieved from The Partnership Resource:
http://www.thepartnershipresource.com/CaseStudies/Mediation.aspx

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