Research the advantages and disadvantages for Ian and his partners of:

(i) keeping the business as a partnership

(ii) converting the business to a private limited company.

Greater % of profit made by Buckden Chips Retain control of Buckden Chips Decisions such as deciding to sell in smaller

40 gram packets can be taken by Ian and partners

Partnership formed by Ian with the other potato farmers and are thus directly responsible for 50% of the raw materials i.e. They control a quality supply of potatoes which make the crisps

Substantial financial burden on each of the three partners – each has provided £400,000 of capital by borrowing and using their land as security

Future expansion as a partnership will depend on the business using their profits to expand the business meaning that the rewards to Peter and partners will be restricted

By supplying crisps for public consumption without the security of limited liability Peter and Co run the risk of financial ruin if for example food contamination resulted in a illness or death.

Peter and partners wish to expand Buckden Chips and the formation of an Ltd would enable them to raise more capital through the sale of shares

This would also potentially reduce the financial burden on the partners of Buckden Chips

Buckden chips would have the protection of limited liability which is important given the nature of the product sold – a food stuff for public consumption.

Reduced % of profit made by Buckden Chips Greater possibility of losing control of Buckden

Chips Less influence re: decisions regarding the

direction and running of the company – now shareholders and other directors to consider whose viewpoints will need to be given equal weight to

As the company grows a need for a bigger supply of potatoes may result in a loss of control of quality as the % supplied by Ian and the original partners is reduced

Investigate the issues that the managers of a business would consider before deciding whether or not to accept a large order from a customer at a discounted price.

Previous dealings with the business – paid on time and in full

Regular customer – previously brought substantial custom to the business, the discount is partly a reward for this

Size of the order – will partly determine the discounted price

Method of payment – if some form of deferred payment, what is the customer’s credit history i.e. have they made payments on time and for the correct amount

Dealings with other businesses – have they made similar large orders and paid on time and in full

Possibility of future dealings with the business