Chapter 1, Problem 1CC

Summary Introduction

Case summary:

In the early of 2008, Person D and Person L formed a cake Company MG. The Company was a good producer of various cakes and they were specialized in few cakes. Person D did the baking activity and Person L took over the marketing and distribution. The company grew rapidly with good quality and sound marketing.

After the article in the leading magazine, the sales of Company MG exploded and so Person D left his job followed by Person L. The company hired new workers for the fast growth of the company for experiencing cash flow and capacity issues. The company was still growing and was approached by various stores for their cakes. The couple has operated the company as a sole proprietorship.

Characters of the case:

• Person D.
• Person L.
• Company MG.
• Magazine GD.

Adequate information:

• Company MG faces cash flow and capacity problems.
• Company MG’s demand increases. Even national level markets approach them for delivery of their product.

To determine: The advantages and disadvantages of changing the company to a Limited Liability Company (LLC) from a sole proprietorship.