IGCSE, A Level Business Student Forum

Q19 Analyse the disadvantages of a public corporation business. [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

(kn)hard to manage
(an) as it is huge it could lead to miscommunication
(an+)delaying business decisions
(kn) anti social activity
(an)they might charge high prices
(an+) giving away customers to their competitors hence reducing sales

[KN] Complex decision making
[AN] Public cooperatives involve a large number of members with varying opinions and priorities.
[AN+] This can lead to slower and more complex decision-making processes, making it challenging to respond quickly to changing market conditions or operational needs.

[KN] Limited Access to capital
[AN] Public cooperatives often rely on member contributions and retained earnings for funding, which can limit their access to external capital sources
[AN+] In highly competitive markets, this limitation could put cooperatives at a disadvantage compared to conventional businesses with access to a wider range of financing options.

[KN]loss of control
[AN]The original owners or founders of the company may lose a significant degree of control over decision-making.
[AN+]this is particularly pronounced if a large portion of the companys shares are held by public investors

[KN]short term focus and pressure for result
[AN]publicly traded companies are often expected to deliver quarterly results that meet or exceed market expectations
[AN+]It may be challenging to pursue projects with longer payback periods or invest heavily in research and development.

[KN] Increased Costs.
[AN] The process of going public and maintaining a public listing can be expensive, with costs associated with underwriting, compliance, legal, accounting, and investor relations.
[AN+] These costs can reduce profitability.

[KN] Loss of Privacy.
[AN] Public corporations are required to disclose significant amounts of financial and operational information, making their strategies and performance highly visible to competitors, customers, and the public.
[AN+] This loss of privacy can put the company at a competitive disadvantage.

(Kn) not efficient (an) since its main aim is not for making a profit it wont work to its fullest (an+) hence the firm will stay inefficient due to difference in goals
(Kn)may compromise on quality (an) the main aim yet again is of reducing social costs and hence will be achieved through any means necessary even if there is compromise on the quality (an+) this will reduce the amount of sales as people would not want such quality products

[KN] Loss of Control
[AN] Decision making may not be efficient by the owners of the company
[AN+] this can lead to slower and non efficient decision making thus leading to loss of control

[KN] Short term Pressure
[AN] Shareholders often want to see quick profits so public corporations may focus on short-term goals.
[AN+] which could be at the expense of long-term strategies.

[KN] Control would be loss.
[AN] Decisions taken by the owner might not affect the company.
[AN+] This leads to loss of control.

[KN] Cost would be increased.
[AN] The process of managing the public corporation business is expensive.
[AN+] These costs can reduce profit earned.

[KN] Loss of Control
[AN] When a company goes public, founders and early investors may lose some control over decision-making
[AN+] so tis may upset the early investors

[KN] time consuming & expensive
[AN] while going public it would be very time consuming to explain the public about the business objectives
[AN+] this would result in unwanted time wasted in explaining the public

[KN]Difficult to manage
[AN] Going public typically results in delusion of control and ownership hence potentially disrupting the company's operations.
[AN+] Thus this can further cause delay in decision making which may hinder its long term success.

[KN] Can be costly.
[AN] Managing things like public lists, accounting , investor relations can consume a large chunk of time.
[AN+] Thus carrying out such expensive operations could reduce collection of total profitability.

Kumail Alvi wrote: ↑Thu Nov 02, 2023 3:23 am [KN] Increased Costs.
[AN] The process of going public and maintaining a public listing can be expensive, with costs associated with underwriting, compliance, legal, accounting, and investor relations.
[AN+] These costs can reduce profitability.

[KN] Loss of Privacy.
[AN] Public corporations are required to disclose significant amounts of financial and operational information, making their strategies and performance highly visible to competitors, customers, and the public.
[AN+] This loss of privacy can put the company at a competitive disadvantage.

bhai saab, where is the direction in your analysis points

[kn] cant make any major decisions
[an] as the business is under govt control no major decision to introduce a new idea or product can be done without government's consent
[an+] therefore low control may discourage the business from investing and staying efficient
[kn] it is costly as
[an] managing things like public lists and investor relations can be time consuming
[an+] Thus carrying out such expensive operations could reduce collection of total profit earned

[KN]Poor quality
[AN]As low prices are charged so COP is kept low which reduces quality of output hence may not satisfy consumers
[AN]leading to low brand loyalty


[KN]Slow decision making
[AN]In state owned businesses there are a lot of legal formalities therefore public corporations may fall into bureaucratic muddle when it come to decision making
[AN]leading to inefficiency

[KN] Loss of Control
[AN] Decision making may not be efficient by the owners of the company
[AN+] this can lead to slower and non efficient decision making thus leading to loss of control

[KN] Can be costly.
[AN] Managing things like public lists, accounting , investor relations can consume a large chunk of time.
[AN+] Thus carrying out such expensive operations could reduce collection of total profitability.

KN] Challenging to control (AN)The act of going public often leads to a false sense of ownership and control, which could potentially cause operational disruptions for the company. (AN+)As a result, this may further postpone decision-making, which could be detrimental to its long-term success.


KN] may be expensive. [AN] Keeping track of things like investor relations, accounting, and public listings can take a lot of time. (
AN+)Thus, performing such costly operations may result in a decrease in overall profitability.