3. SCOPE OF BUSINESS

This section describes the kind of business the corporationCorporation: the most common form of business organization. It pursues set objectives and is empowered with legal rights usually only reserved for individuals, such as to sue and be sued, own property, hire employees, or loan and borrow money. is going to undertake, and its limits:

• what it is.
• where it will and won't take place.
• the duration of the business.

At this point, you should make doubly sure that the other party imagines this relationship within the same time frame you do. Do you want to do just this project together, or have you anything else in mind? As Module 1 explains (see Module 1, “The Community Economic Development Perspective,” p. 1-7), if greater capacity and self reliance are your goal, short term projects may not be as useful. Review your research on benefits and on the interests motivating your partner's behaviour.

In this section there may also be certain restrictions your ADC wishes to place on its partner. You may insist that the partner act on no other opportunities affecting your interests in this region or sector. If they agree, they cannot do any business in the area defined unless they work with you.

Market Segments and Geographical Limits

Negotiations around the scope of business can become complex. Negotiating market segments as well as geographical limits is quite common even in a business like trucking. As Bill Hatton explains,

Kitsaki had permitsPermits: legally-binding permissions that govern activities that may occur during exploration or mine operation, like quarrying, use or impact on water, building of transmission lines, etc. to haul diesel fuel and carry freight from La Ronge, Saskatchewan to points north. The possibility of serving the Key Lake Mine as well made us go looking for a Joint Venture partner.

Kitsaki's purpose was not just to sustain its current business. We also wanted to expand the business in order to increase Kitsaki’s revenue and job creation. So we wanted a partner who could give us the capacity to undertake most or all of the bulk fuel hauling into northern Saskatchewan. We approached a firm that primarily did bulk hauling in the north.

In the negotiations we wound up spending a lot of time trying to agree about the scope of business. The intended partner at first wanted to limit the scope to the Key Lake Mine. Basically, they didn't see beyond working with us on the haul to Key Lake. We were unknowns at the time. They likely felt it was risky to do business with an Aboriginal partner.

Saskatchewan policy, however, requires mines to build into contracts a preference for Aboriginal and northern businesses. Mining companies put out the word that would-be contractors were strongly advised to partner with an Aboriginal or northern company. Moreover, the partnership should be intended to last longer than the contract on which they bid.

So we explained to our intended partner how they needed a reliable Aboriginal partner. We made crystal clear our desire to expand our trucking business so it could compete for the hauling contracts to all the mines north of the 54th parallel. They accepted this. Then they tried to restrict the agreementAgreement: any explicit, signed document that is negotiated and includes mutual concessions or limitations placed on both sides. Examples are Negotiation AgreementsNegotiation Agreement: an early agreement in the mining process, likely to occur in the Exploration StageExploration Stage: the whole range of activity from searching for and developing mineralMineral: A naturally-occurring, homogeneous substance that has a definite chemical composition and (usually) a crystalline structure. deposits., which would outline the basis of the relationship between the Aboriginal group and the mining company and how the relationship will evolve if the mine moves forward. , Exploration Cooperation Benefit Agreements, Socio-Economic Participation Agreements. to everything north of the 55th parallel. (This fixing of geographical boundaries is called a "non compete clause.") We knew there was an awful lot happening between 54 and 55. We managed to get them to drop the non-compete clause.

We did not define our interests merely in terms of geography, but in terms of market segments as well. The intended partner felt that it was bringing a very specific market to the deal. We did too - we held a very good contract for the haul of diesel fuel. We needed to protect our interest in those hauls. Ultimately, we agreed that certain kinds of haul were exclusively reserved for us for a period of time. Other segments we contributed to the Joint Venture as part of our equityEquity: the dollar value of what a person or organization owns (as opposed to debt, which indicates what a person or organization owes). A person or organization can have an equity interest in something if they have part or full ownership..

Similarly, in a very different business, parts of a resort JV might be reserved for the exclusive or primary benefit of one partner or another. Say you have a hotel and a golf course. One partner might retain the golf course while the other gets exclusive right to the benefits from the golf carts and the pro shop. In the hotel, one partner may control the benefits related to the restaurant. The other handles the bar and off sales. The negotiation of these matters will be shaped by the interests and capacities of each partner.