principles of governace

prin" rel="nofollow">inciples of governace Order Description MBS 518 Prin" rel="nofollow">inciples of Busin" rel="nofollow">iness Governance Assignment Semester 2 2016 Edward and Johnny are brothers and love to sail together. They want to turn their sportin" rel="nofollow">ing in" rel="nofollow">interest in" rel="nofollow">into a busin" rel="nofollow">iness. They then decided to start their own busin" rel="nofollow">iness called Everbright Sails Pty Ltd. Edward and Johnny design and manufacture sails for all size yachts and supply wholesale to retail outlets. Their company becomes very successful and soon they need more sophisticated machin" rel="nofollow">inery to ensure that their busin" rel="nofollow">iness is profitable. Edward's cousin" rel="nofollow">in Julio is also in" rel="nofollow">in the manufacturin" rel="nofollow">ing busin" rel="nofollow">iness, supplyin" rel="nofollow">ing plant and manufacturin" rel="nofollow">ing equipment to factories. Julio is the sole director and marketin" rel="nofollow">ing manager for the company Equipment Pty Ltd. On Monday Julio approaches his cousin" rel="nofollow">in Edward at a weddin" rel="nofollow">ing function and offers to sell Everbright new sail makin" rel="nofollow">ing machin" rel="nofollow">inery that has been developed in" rel="nofollow">in France. Julio claims that the equipment will improve output and efficiency in" rel="nofollow">in the sail makin" rel="nofollow">ing factory by 30%. He said he is prepared to sell the equipment to them for only $80,000. Julio said the offer will end on Friday at 5pm, and acceptance could be by email or post. Edward and Johnny thin" rel="nofollow">ink that Julio's offer is a very good and one which would enable Everbright to in" rel="nofollow">increase production and profit. Edward and Johnny are keen to accept Julio's offer but feel that they really should try to negotiate better terms. On Tuesday Edward sends Julio an email on behalf of Everbright which states : Everbright Sails is very in" rel="nofollow">interested in" rel="nofollow">in your offer. However we believe that the new equipment will only deliver a 15% profit return on capital, so we are only prepared to pay you the amount of $50,000 for the machin" rel="nofollow">inery. Julio happens to be on a three day conference on Tuesday, Wednesday and Thursday, so has not read his email. Meanwhile Edward and Johnny have reconsidered their position and are feelin" rel="nofollow">ing nervous that they may have missed the deal because they have not heard back from Julio. They decide to accept Equipment Pty Ltd's origin" rel="nofollow">inal offer and on behalf of Everbright post Julio a letter on Friday mornin" rel="nofollow">ing agreein" rel="nofollow">ing to purchase the French machin" rel="nofollow">inery for $80,000.Just to be sure, at the same time they email Julio. Due to problems with Equipment Pty Ltd ISP, the email is not received in" rel="nofollow">into Equipment Pty Ltd's system until 6pm Friday. Over the weekend Julio meets with his old friend Jack who happened to be in" rel="nofollow">in the market for the same French sail makin" rel="nofollow">ing machin" rel="nofollow">inery. Julio owes Jack a favour so wants to give the machin" rel="nofollow">inery to Jack in" rel="nofollow">instead of sellin" rel="nofollow">ing it to Everbright. On Monday mornin" rel="nofollow">ing, Julio reads his email and opens the post. He calls Edward and Johnny and says the deal is off. Edward and Johnny are very upset and want to force Julio to sell them the French machin" rel="nofollow">inery. What are the risk factors in" rel="nofollow">involved in" rel="nofollow">in the above negotiations : Advise,usin" rel="nofollow">ing appropriate objective references, Julio (Equipment P/L)as to whether or not a contract exists with Edward and Johnny (Everbright P/L). This assignment is worth 40 marks