Advantages and Disadvantages of PLC's

A table of advantages and disadvantages of becoming a plc.

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  • Created by: Megan
  • Created on: 27-04-13 14:26

Advantages and Disadvantages of PLC's

Advantages

  • Able to exploit market oppurtunities straight away.
  • Allows the business greater freedom and flexibility to finance its growth and employment.
  • Status of comapny is increased, so banks are more willing to lend money to them.
  • Can raise more capital as a plc by selling shares through a stock exchange (as there are more potential buyers).
  • Increased capital allows the business to grow and diversify.
  • Funds generated by a public offering, a relatively safe form of capital.
  • Limited liability.
  • Tax benefits.
  • Raising finance.
  • Business continuity.
  • Protecting the business name.

Disadvantages

  • Formation and running costs can be expensive.
  • Decisions tend to be slow.
  • Distance between employees and shareholders.
  • All of the affairs of the company are public.
  • Legal registrations.
  • Shareholders in plc's are generally seen and wanting short term profit over long term success in the business.
  • Theres always the threat that someone will buy enough shares to take over the company.
  • Shareholders want to make as much money as possible which makes it hard to persue the companies other objectives.
  • Divorce of ownership and control - shareholders own the compny but directors control the day-to-day running of the company so directors decsisions can not directly affect the shareholers so there can be disagreements.

Evaluation

By conveting to a plc it means that there is a lot more money available to the company in the form of share capital which can allow the firm to expand greatly. However, there is also the risk of takeover if aother firm buys enough shares.

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