[Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a pedal replacement for children's bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy-release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled.
Phil plans to purchase materials for making the product from others, assemble the products at the venture's facilities, and hire product sales representatives to sell the Pedal Pushers through local retail and discount stores that sell children's bicycles. Phil will need to purchase plastic pedals and extensions, bolts, washers and nuts, reflective material, and a microchip to provide the music when the bicycle is pedaled.
A. How should Phil organize his new venture? In developing your answer, consider such factors as amount of equity capital needed, business liability, and taxation of the venture.
B. Phil is concerned about trying to protect the intellectual property embedded in his Pedal Pusher product idea and prototype. How might Phil consider protecting his intellectual property?
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Business Organization and Intellectual Property
To organize his new venture Phil should use an optimal level of debt and equity in its capital structure. More of debt and less of equity will help to reduce tax liability and at the same time increase return on equity capital for the venture. Generally 2:1 is considered optimal for debt and equity respectively.
For this Phill has to register his product trade mark on the Principal Register in the U.S. Patent and Trademark Office. Apart from this he will have to monitor all the counterfeiting problem the the company facing on the regular basis, as it will give an idea about ...
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