Evaluate public limited company as a form of business organisation.

?
  • Created by: jerd
  • Created on: 10-05-23 20:00

Evaluate public limited company as a form of business organisation.

Advantages

  • raising capital - can issue shares for sale to the general public + are able to gain access to these funds interest free (lenders consider Plc's less risky due to their size)
  • limited liability - not personally liable for debts of company (shareholders only liable for of shares they purchased + personal assets are protected)
  • continuity - company is unlikely impacted by death of shareholders as shares can be rescinded or re-issued to other shareholders
  • specialisation - greater no. of directors who may specialise in areas which they have comparative skills advantage  (specialisation gives Plc's competitive advantage in the marketplace)

Disadvantages

  • lack of privacy - required to submit financial statements to Registrar of Companies (analysts scrutinise management decisions + their results)
  • set up costs - much more complicated than Ltd with regards to directors + expense due to legal fees
  • threat of takeover - value of Plc is determined by current share price on stock exchange (threat of takeover may increase as company is underperforming
  • ownership + control - difficulties may arise when directors don't act in best interest of shareholders

Evaluation

- plc after its name  - owners called shareholders  - separate legal existence from owners  - lengthy legal process to set up  - controlled by Board of Directors  - run by Managing Director  - divorce of ownership + control

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Forms of business ownerships resources »