Reference no: EM131499479
The board of directors of Larry Potter Pty Ltd (LP) is made up of 6 individuals all with differing degrees of education and experience. LP is a company that makes children's costumes with a sci-fi or supernatural theme like Star Trek, Star Wars or Harry Potter. The company decides to restructure its operations to reduce costs and become more competitive.
The board of directors appoints a business operations consultant to suggest the best way to organise the different departments and operations in the company.
Three of the directors read the consultant's report and support it completely. These three directors have a business background and business degrees from Macquarie University. Two other directors do not read the report but adopt it on the advice of the first three directors. These two directors have no formal education past High School and have no business background.
The last director reads the report and realises that it is poorly prepared, full of spelling mistakes and makes ridiculous recommendations like: 'Larry Potter should consider organising its operations in alphabetical order because it's more pretty that way'. This director does not support the adoption of the consultant's report.
After the changes are adopted, Larry Potter unsurprisingly becomes more dysfunctional, losses lots of money and eventually has to be wound up.
Advise on the liability of each set of directors in relation the reorganisation decision taken.