Based on the above case study, answer the following questions in at least 20-25 words. There are 2 questions and sub questions in that two questions only

Question 1

WHAT IS/ARE THE PROBLEM(S) THE CASE ISSUES- cover the below sub questions in this one only

a. Separate the problems/issues. What are the main issues?

b. What issues affect the Company and how?

c What case facts show what the issues are.

d. Supplement insufficient case facts by assumptions or outside research. Assumptions should be: necessary, explicitly stated

and explained, reasonable.

Question 2

PROBLEM STATEMENT- Narrow down the issues to identify the main issue/problem(s)- cover the below sub questions in this one only

a WHY is this/are these the most important problems for the Company?

b. Identify for each problem: Will the Company go bankrupt, will it cease to exist, will it not be able to pay its bills, will there be law- suits, will the have international complaints lodged against them do they need to lodge complaints to make progress internationally with the business

Assignment: Business Law and Ethics Case Analysis International Business Law and Ethics LAWS54310 SS2021 You sit as a board member on the Board of Directors for the company called Basic Beauty Inc. (BBI), that began as an online blog and has developed, over time, a retail website at www.basicbeauty.ca with a growing online presence and retail business. The business is an Ontario registered corporation, and at the moment is planning to raise money for operating capital to expand the business domestically, as well as internationally. The blog, and now website, are getting hits and increasingly, product orders from people in Canada and also the USA. There are some issues that have come up that the Board of Directors must examine and determine what actions, if any, are required. The Board has the "fiduciary duty" (legal duty), to ensure that BBI is being managed properly, legally as well as ethically. You have been tasked by the Board to gather the facts and give recommendations in a Report. Here are the facts, as you understand them: Davit and Kate are entrepreneurs who worked together in a fashion and beauty products company as employees, and started to develop a "side business". They incorporated the company Basic Beauty Inc., and started to build an online customer base and product for their business. Initially, Kate had a personal beauty blog, which started growing an audience. Kate was into holistic skincare products, and started to research the use of herbs, and also honey, to produce a facial skincare product. She started to work with local suppliers to help her develop a skincare cream that used her idea of this mixture of herbs and honey. She wrote on her blog about the virtues of using herbal products, and her scientific research involving the benefits of using these types of products for healthy and glowing skin. Kate's blog, which Davit helped her transition to a website newsletter, started to get more attention. As they entered into the process of producing an actual skincare product, both Kate and Davit left their jobs as employees to work full-time with the company BBI. They are both shareholders of the company, sit as directors on the Board, and as well, run the business as executives for the company. People are reading Kate's daily posts, and subscribing to her website to receive the online newsletters that have comments on beauty trends, and other uses of herbs in the health and wellness field. Davit has also set up an online store linked to the website, where customers can purchase products that the website has started to sell, including their own locally produced herb/honey skincare product. It is clear that a growing number of people are keen to see what is going on with Kate's ideas and comments on the beauty industry. Additionally, the online customer base for Kate's uniquely formulated herbal/honey skincare cream has started to grow. Kate has been mainly writing original content, researching products and other issues in the industry, trying out products and commenting on them in her newsletter. Sometimes Kate, while working so hard on developing her own skincare product for BBI, has run out of ideas for the other content in the online newsletter of the website. She has occasionally copied some of the written content from other health and beauty websites/blogs. She has often re-worded her post, but there have been instances when she has not. The company has received a couple of, "cease and desist letters from competing websites alleging that the BBI site has, "ripped them off". One company in particular, "Beautiful You", showed the website posts with side-by-side versions on their own site to that of BBI to demonstrate that BBI was not using original content. BBI has not responded to these letters, but has chosen to ignore them, and Kate moved on to other posts. However, these posts still exist in the BBI website newsletters Davit and Kate are determined to make this into a large and successful business. Therefore, when Davit was looking at the financial status of the company, he realized that the company had to increase production of their own skincare product to bring in revenue by selling more of the company product. Davit has set up purchase agreements with several local producers of herbs, and with a local farmer who has beehives which produce a good quality honey, as this is a key ingredient to the skincare product BBI makes at it's Toronto location. As a result of looking for ways to expand the business, Davit has come across another beauty products company in Ottawa that is producing a remarkably similar, if not identical, product to BBI. It seems that the founder of this other company has followed Kate's posts on the BBI blog initially, and the website more recently and has perhaps stolen ideas that have been the foundation of the unique BBI formulation and production of the herb/honey product. Davit would like to somehow protect their unique formula and production of the herb/honey skincare product here in Canada, and also in the USA and perhaps even Europe as they look towards international sales. Thus, they would then have the right to produce, sell and license the formula and product production for some years to come. As much as Davit and Kate are happy with their local producers of the ingredients for the herb/honey skincare cream, they need to get more supply of the honey ingredient to increase production. Randy, BBI's senior sales person, has taken a trip to the USA and found a supplier of honey. This honey producer from the USA can ship the product in large vats, which is delivered to the warehouse of BBI. This honey product is being sold in large quantities, and it is extremely cheap compared to the honey from the local Ontario Farmer who has been supplying BBI with the ingredient so far. The Farmer has complained to Kate that this is not fair to him, as the producer of this product from the USA should be selling their goods for the same, or relatively the same, price as the local producer. As the local supplier of this good is being "harmed by the lower pricing, the Farmer has indicated to BBI that he will be asking the Canadian Boarder Services Agency to investigate the import of this honey to see of the importer is in compliance with trade agreements. Davit has not mentioned to Kate that he is worried about the Farmer making a complaint and asking for an investigation. However, he has decided that the company will use, in any event, the new USA honey product, as they are able to boost the production of their product. As the production of the skincare cream has now increasing, Davit makes a connection with a business contact to arrange the sale of the herb/honey skincare cream product overseas into Europe. The company's online sales in Canada and even the USA are going well, but a shipment of this new batch of skincare cream to Europe would create a large boost to their sales and revenue. The product box for the skincare cream is labeled: 100% MADE IN CANADA. It seems though, that with the use of the USA honey ingredient, Kate who is managing production no longer knows if the product is rightly labeled, as it may be that over 50% of the product originates outside of Canada. Davit, just interested in the sales aspect of this transaction, has planned to make and sell a large quantity of the product into Belgium for distribution around Europe. There is a lot of competition for this type of product on Europe, but Davit hopes that their unique formulation will sell well to consumers. Davit and Kate have decided to seek investment to fund this business growth. One venture capitalist, Sam Biggyx wrote in a follow-up email during the fundraising process: "You, Davit and Kate, clearly have a very successful business, and one that makes a lot of sense from an investment standpoint. Your deck and presentation were very polished, and thank-you for your time meeting with me. My team and I will do some background investigations on your company, the past sales and future prospects. We will be asking some questions of your employees, investors, suppliers and customers to ensure the company is in good shape before we make a decision on whether we will invest in your company." Davit has asked that a Report be put together on the company setting out any issues or problems the company needs to address before the investor/venture capitalist starts their investigations. The Board of Directors is comprised of you, Davit, Kate, their accountant who is Kate's brother, one other investor who is a friend of Davit and Kate's. You manage a small consulting business and are advising Davit and Kate in their attempt to raise money with Sam Biggyy, and other potential investors. The Report will be circulated to the Board of Directors, with action items for the company BBI