Advantages for John being a sole trader:
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The companies are usually small, and easy to set up – John got help from his father who owned his own company also, which gave John the boost to start his company as a one man business. At the start of Cadbury, the company was very small and it was easy to set up the company because of the help he received form his family.
- Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost.
- The wage bill will usually be low, because there was no employees but John did receive some help from his family.
- It was easier to keep overall control of Cadbury, because John had a hands-on approach to running the business and can make decisions without consulting anyone else.
- John was able to respond quickly to changes in the market.
- Privacy is maintained as financial details do not have to be published.
- Due to the small size of the business, John could put forward a personal service to their customers.
Disadvantages:
- John had no one to share the responsibility of running the business with.
- John often had to work long hours and find it difficult to take breaks, or time off if he was ill. Illness can cause the stoppage of the business, which leads to a loss of income in the short term and could even cause the loss of customers in the long tem.
- Developing the business is also limited by the amount of capital personally available.
- There is also the risk of unlimited liability, where John can be forced to sell personal assets to cover any business debts.
- John was short of capital for investment and expansion.
- John could be sued by his customers, due to a disagreement because sole traders are unincorporated businesses.
- Cadburys depended and is determined by one person. If that one person looses interest or dies then the business will come to a close.
Cadbury Limited:
While the company wasn’t making much growth, John Cadbury needed a more help. He received that help from changing Cadbury sole trader in to a limited company but he still didn’t employ anyone. John was receiving the help that he needed form his family and the Quaker family. The Cadbury family and the Quaker family were both fully committed to the growth of the business. This type of ownership was working very well for Cadbury Limited because the company was expanding fast. The Cadbury family now could afford a rented factory to manufacture and a few shops to sell their products. However, at this point they still didn’t employ because of the shortage of money but they were still working as a committed family business. Also to increase the businesses growth, John Cadbury had an advertisement:
“John Cadbury is desirous of introducing to particular notice ‘Cocoa Nibs,’ prepared by himself, an article affording a most nutritious beverage for breakfast.”
This advertisement was placed in a plate glass window which attracted many people and increased his company’s growth.
Another reason that John Cadbury chosen to change his company into a limited company because it allows the Cadbury family to accept limited liability to the amount invested, and whilst profits are shared equally the responsibility and control of the business lies with the members of the family.
The things that the Cadburys family should help towards the company were:
- The family abilities to drive the business forward.
- Leadership qualities and management experience.
- Level of specialist knowledge and expertise.
- The level of trust associated with the family.
These four points are what was needed for the Cadbury family to be more successful which they accomplished.
The Cadbury family had many advantages and disadvantages for being a limited company.
Advantages:
- The main advantage of a limited company over a sole trader is shared responsibility. This allows the Cadbury family to concentrate on the strengths than can complement another's.
- The Family are also contributing capital, which allows for more flexibility in running the business.
- There is less pressure of time on John as a individual. This means that the family can get time for holidays or even cover illnesses.
- There is someone to consult over business decisions.
- There are no legal rules and regulations to complete when setting up the business.
- Normally this type of business is larger than sole trader which gives the Cadbury family a stronger position to raise money from outside of the company.
Disadvantages:
- The main disadvantage of a family business comes from shared responsibility.
- Disputes can arise over decisions that have to be made, or about the effort one member of the family is putting into the firm compared with another.
- The distribution of profits can cause problems. The deed of a family business sets out who should get what, but if one member feels another is not doing enough, there can be dissatisfaction.
- A family business, like a sole trader, has unlimited liability.
- Any decision made by one member of the family on behalf of the company is legally binding on all other members.
- Families can be sued by customers because the family businesses have unincorporated status.
Cadbury Schweppes Public Limited Company:
As years went on, the company became stronger and had expanded and still is. Throughout the year’s there were different owners and partnerships but they still was only a family business. It was only until in the late 1870’s when they had workforce of 200 employees and had more shops and factories. In 1899 the Cadbury brother, George and William Cadbury became a PLC. Cadburys had now more factories, employees, advertising, offices, training schemes and etc. This was the starting point when they were really going to grow as a business. Cadbury was expanding so quickly, that they went international in 1932 and had there first factory’s at Canada, New Zealand and Dublin.
However, the family went even further to increase Cadbury’s size. The Cadbury family joined Schweppes in 1969 to form Cadbury Schweppes plc. Cadbury Limited is the confectionery division of Cadbury Schweppes plc.
Cadbury Schweppes plc is incorporated, which means they can sue or own assets in their own right. Their owners are not personally liable for the firm's debts (limited liability). Cadbury Schweppes plc is divided up into equal parts called shares. Whoever owns one or more of these is called a shareholder.
Cadbury Schweppes plc can sell its shares on the Stock Market, while a Private Limited Company (LTD) cannot. This is another reason why Cadbury joined Schweppes to become a public limited company.
Advantages for Cadbury Schweppes PLC:
- Raise large amount of capital from share issue.
- Benefit from economies of scale, e.g. bulk buying, cheaper borrowing.
- Produce goods at lower unit cost.
- The size of Cadbury Schweppes plc can sometimes control the market.
Disadvantages for Cadbury Schweppes PLC:
- Become too large resulting in poor labour relations.
- Conflict of interest between shareholders and the Board of Directors.
- Possibility of takeover or merger because shares can be bought by anyone.
- Setting up the business is very expensive.
- The size of the company doesn’t let them deal with their customers at a personal level.
- Cadbury Schweppes plc competitors can use their accounts to their advantage. The public can also use this information.
Cadbury Schweppes plc now:
Today, Cadbury Schweppes employs over 40,000 people and its products are available in almost 200 countries across the world. Cadbury Schweppes plc is proud to be the world's third largest soft drinks company and the fourth largest confectionery company.
