McGee Cake Company Mini Case
In early 2005, Doc and Lyn McGee formed the McGee Cake Company. The company produced a full line of cakes, and its specialties included chess cake*, lemon pound cake, and double-iced, double-chocolate cake. The couple formed the company as an outside interest, and both continued to work at their current jobs. Doc did all the baking, and Lyn handled the marketing and distribution. With good product quality and a sound marketing plan, the company grew rapidly. In early 2010, the company was featured in a widely distributed entrepreneurial magazine. Later that year, the company was featured in Gourmet Desserts, a leading specialty food magazine. After the article appeared in Gourmet Desserts, sales exploded, and the company began receiving orders from all over the world.
Because of the increased sales, Doc left his other job, followed shortly by Lyn. The company hired additional workers to meet demand. Unfortunately, the fast growth experienced by the company led to cash flow and capacity problems. The company is currently producing as many cakes as possible with the assets it owns, but demand for its cakes is still growing. Further, the company has been approached by a national supermarket chain with a proposal to put four of its cakes in all of the chain’s stores, and a national restaurant chain has contacted the company about selling McGee cakes in its restaurants. The restaurant would sell the cakes without a brand name.
Doc and Lyn have operated the company as a sole proprietorship. They have approached you to help manage and direct the company’s growth. Specifically, they have asked you to answer the following questions.
What are the advantages and disadvantages of changing the company
organization from a sole proprietorship to an LLC
What are the advantages and disadvantages of changing the company
organization from a sole proprietorship to a corporation
Ultimately, what action would you recommend the company undertake?
Why?
1-3 Page Paper and APA Guidelines
……………Answer Preview……………
What are the advantages and disadvantages of changing the company
organization from a sole proprietorship to an LLC
Changing the company organization to LLC will have its own advantages as well as disadvantages. The advantages include limited liability. The owners will not have personal liability for the debts and liabilities of the company. Unlike a sole proprietorship, an LLC debts and legal obligations does not put owners’ personal assets at risk. There is also flexibility in the sharing of profits. Profits will be shared according to the owners’…
APA
476 words
