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Business Ownership Choices - 10 Mark Question

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Introduction

Transfer-Encoding: chunked ´╗┐Business Ownership 10 Mark Question (May 2012) Given Context: Orion Designs was established five year ago by Amita Patel and her friend, Yi Ling, after they both finished Art and Design courses. Orion Designs is run as a partnership between the two women. There are currently no other partners. Amita and Yi create hand drawn designs in their studio which is located on an industrial estate. These designs are then sent to another business where a computer is used to put the designs onto transfers. When Amita and Yi get these transfers back, they are put onto mugs and plates purchased from a separate pottery company. Orion Designs then sells the finished mugs and plates as souvenirs. Orion Designs has been making increased profits each year. ...read more.

Middle

Introduction: Amita and Yi are two friends who have a business that puts designs onto pottery. They are currently a partnership but are trying to work out whether they should change the ownership type of their business in order to expand. Paragraph 1 (Analysis of Option 1 and Option 2) The business is currently a partnership so Amita and Yi both have unlimited liability. This means they would have to sell their personal assets if the business went into debt. If they took option 1 this disadvantage would still remain. Option 1 is low risk as they are not doing anything different but it might be difficult for them to expand as they won?t have any additional finance. If they know people who want to join their business then they could take on additional partners, these would have unlimited liability as well. ...read more.

Conclusion

Conclusion At the moment there are only two partners, Amita and Yi so they will be limited in the amount of money they can invest but they can make all the decisions themselves. If it were to become a ltd then other shareholders would be able to make decisions and Amita and Yi would lose some control of their business. There are also legal formalities involves in becoming a ltd which would take time and cost money. In order to secure the future of the business and expand I recommend that Orion Designs takes option 2 and stays as a partnership but invites other partners to invest in the business. This way they get the advantage of more capital in the business but do not have to spend a lot of time and money becoming an ltd. ...read more.

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