People cope differently when hit by hard times. For some companies, the choice is between mass termination and venturing to other enterprise.
For Starbucks, their response to the financial crisis was a little of both. While few employees were terminated, Starbucks also ventured into album sales.
In line with this, Singer/Songwriter Carly Simon sued Starbucks for allegedly mishandling the sales of his album in the latter’s cafes.
Simon and StarCon, Starbuck’s music partner, entered into a marketing and promotional agreement to promote Simon’s album “This Kind of Love.” However, sales continued to drop as it did not receive the expected response from the music consumers.
Promotional contract between two parties are binding and enforceable among them. This means that each party must make good his obligation in the contract. However, the outcome of the agreement depends on various factors such that the blame on the tepid sales could not be put on Starbucks alone.
If Simon believed that Starbucks had not performed its obligation under the contract, he can employ the services of a business attorney to pursue a case for breach of contract.
The global financial crisis has been creating great impact on the smaller companies which could be looked upon as an advantage.
According to an Ernest and Young analysis of the Russell 2000 Index, the index of the smallest public companies just got smaller.
The Russell 2000 is the commonly used benchmark for mutual funds that classify themselves as “small cap”. It is generally quoted measure to determine the overall performance of the small-cap to mid-cap company shares. The index included about 2,000 smallest U.S. Securities with reference to their combined market capitalization and current index membership.
With the present financial condition, companies with a market cap of as low as $78 million were now included in the list. Ernest and Young analysis further revealed that the average market cap went down 3 percent to 432 million while the median market cap dropped to 41 percent to $515 million in 2008.
Maria Pinelli, America’s director of Strategic Growth Markets for Ernst & Young had the opinion that the lower threshold was a manifestation of the damage inflicted on companies and the overall market through the end of May 2009.
However, this created an opportunity for smaller companies to get valuable exposure before a new, larger investor based. Inclusion on the index provided small companies the needed investor’s exposure. This would serve as a motivation for them to generate capital and accelerate growth in order to stay on the list.
These numbers may be very overwhelming for people who have no sufficient understanding. But with the help of business lawyers, they will know how the present Russell 2000 can influence them, if any, especially in the employment aspect.
