What are the disadvantages of becoming a plc?

The original owners can lose control, because anyone can buy shares and a takeover becomes possible. A plc must publish full, detailed accounts, so rivals can study its performance.

What is the minimum share capital a UK plc must have?

A UK plc must have issued shares worth at least £50,000. At least a quarter of that value must be paid up before the plc can trade.

Why do the directors of a plc face pressure from shareholders?

Shareholders expect rising dividends and a rising share price. Directors may be pushed towards short-term profit rather than long-term plans.

What is stock market flotation?

Flotation is when a company first offers its shares for sale to the public on a stock exchange. A private limited company must re-register as a plc before it can float.

Edexcel GCSE Business 1BS0

Enterprise and Entrepreneurship

Topic overview The dynamic nature of business Risk and reward The role of business enterprise

Spotting a Business Opportunity

Topic overview Customer needs Purpose and methods of market research Market research data and its reliability Market segmentation The competitive environment

Putting a Business Idea Into Practice

Topic overview Business aims and objectives Business revenues, costs and profits Cash and cash flow Sources of business finance

Making the Business Effective

Topic overview Business ownership and limited liability Franchising as a start-up option Business location The marketing mix Business plans

Understanding External Influences on Business

Topic overview Business stakeholders Technology and business Legislation and business The economy and business Responding to external influences

Growing the Business

Topic overview Organic and inorganic business growth Public limited companies and finance for growth Changes in business aims and objectives Business and globalisation Ethics, the environment and business

Making Marketing Decisions

Topic overview Product design, life cycle and differentiation Price and pricing strategies Promotion strategies and technology Place and methods of distribution Using the marketing mix to make business decisions

Making Operational Decisions

Topic overview Business operations and production processes Working with suppliers Managing quality The sales process

Making Financial Decisions

Topic overview Profit, profit margins and ARR Understanding business performance

Making Human Resource Decisions

Topic overview Organisational structures and communication Different ways of working Effective recruitment Effective training and development Motivation in the workplace

Growing the Business

Public limited companies and finance for growth

3 things to know
Paper 2

Overview

Public limited companies and stock market flotation, their costs and pressures, and financing growth through retained profit, selling assets, sale and leaseback, loan capital and share capital.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What is loan capital, and when does it suit a growing business better than selling shares?

Key term

What is a public limited company (plc)?

Key term

Why might a growing private limited company become a plc?

Questions from this subtopic

Each one with the model answer underneath.

1
What is a public limited company (plc)?
Model answer
A plc is a limited company that can offer its shares for sale to the general public. Many plcs have their shares traded on the London Stock Exchange.
2
Why might a growing private limited company become a plc?
Model answer
A plc can raise very large sums by selling shares to the public. The extra finance can pay for major expansion without borrowing.
3
What are the disadvantages of becoming a plc?
Model answer
The original owners can lose control, because anyone can buy shares and a takeover becomes possible. A plc must publish full, detailed accounts, so rivals can study its performance.
4
What is the minimum share capital a UK plc must have?
Model answer
A UK plc must have issued shares worth at least £50,000. At least a quarter of that value must be paid up before the plc can trade.
5
Why do the directors of a plc face pressure from shareholders?
Model answer
Shareholders expect rising dividends and a rising share price. Directors may be pushed towards short-term profit rather than long-term plans.
6
What is stock market flotation?
Model answer
Flotation is when a company first offers its shares for sale to the public on a stock exchange. A private limited company must re-register as a plc before it can float.

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Enterprise and Entrepreneurship

Spotting a Business Opportunity

Putting a Business Idea Into Practice

Making the Business Effective

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Revenue = price × .

quantitycostprofit

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AGoods must be of satisfactory quality.

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CGoods must be as described.

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Cash inflows means money coming into a business.

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