2. Impact on Shareholders/Owners
Advantages Disadvantages
If Hebden carpets raise
money for their expansions
by selling shares then they
don’t have to get a loan and
repay it with interest.
They do not have a cost
which other companies might
have and so are more likely to
make a profit.
As a shareholder you are only
paid a dividend IF the
company makes a profit.
You now own a smaller %
share of the business and so
have less control over it.
This means that more people
have to be consulted when
making decisions and
shareholders may over rule
your decisions/ideas – as with
the recycled carpets
which can be very frustrating.
3. Impact on Managers
Advantages Disadvantages
Easier to raise funds for
your proposals as you can
sell shares to anyone
The company can grow
more quickly and so you
can be in charge of a bigger
operation with the
potential for you to earn
more money
Less control of the
business
Your ideas may be over
ruled and you may spend
hours researching new
products and proposals
only to be told No
This could be the outcome
on the Poland expansion
4. Impact on Employees
Advantages Disadvantages
They could buy shares in
the business themselves or
could be given shares to
make them feel more
proud of the company and
then they work harder.
If being a PLC allows the
company to expand then
their job is more secure as
the company is employing
more people not less.
Company may be bought
out e.g. an offer was made
by a Chinese company.This
may lead to you being laid
off andYorkshire is an area
of high unemployment.
5. Impact on Competitors e.g.
Cormar carpets Ltd
Advantages Disadvantages
If Hebden carpets are
bought by one of the large
European competitors, it
might just be bought and
shut down to eliminate it
as a competitor – this
means less competition for
local companies such as
Cormar carpets.
If Hebden carpets can raise
money more quickly they
can expand more quickly
and take advantages of
opportunities in the market
e.g. selling vinyl floors into
Europe with a 50% higher
profit.
Hebden will get a bigger
market share and be more
powerful.
6. Drawing on your pre-examination
research, explain the advantages and
disadvantages for Hebden Carpets PLC ‘s
stakeholders of being a PLC in terms of :
(i) staying competitive
(ii) creating and keeping jobs
(iii) being profitable
Would the stakeholders be better off if
Hebden carpets was a Limited company?
(make a decision and justify it IN
CONTEXT)
10 marks
