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Goodfoods Ltd is an indigenous company set up by sisters Una and Jane O’Sullivan and it has 14 full-time employees - Leaving Cert Business - Question 2 - 2007
Question 2
Goodfoods Ltd is an indigenous company set up by sisters Una and Jane O’Sullivan and it has 14 full-time employees. As a company, it benefits from limited liability.... show full transcript
Worked Solution & Example Answer:Goodfoods Ltd is an indigenous company set up by sisters Una and Jane O’Sullivan and it has 14 full-time employees - Leaving Cert Business - Question 2 - 2007
Step 1
Explain the term 'limited liability'.
Answer
Limited liability refers to the legal structure of a company where the financial obligations of the company are separate from its owners. In the event of financial difficulties or bankruptcy, the personal assets of the owners (shareholders) are protected. They can only lose the amount they have invested in the business and are not personally liable for the company's debts. This encourages entrepreneurship, as it reduces the risk associated with starting a business.
Step 2
What is meant by the term 'indigenous company'?
Answer
An indigenous company is a business that is established and operates primarily within its home country. It is often owned and managed by local individuals or groups. Such companies contribute to the local economy by creating jobs, promoting local culture, and often using local resources. The term emphasizes a connection to the community and local traditions, as opposed to multinational corporations that operate in multiple countries.
Step 3
Outline three challenges Goodfoods Ltd may face when exporting to foreign markets.
Answer
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Competition: Goodfoods Ltd may encounter established brands in the foreign market, making it challenging to gain market share. Understanding local consumer preferences is crucial to tackle this issue.
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Establishing their brand name abroad: Building brand recognition in a new market takes time and resources. The company will need to invest in marketing strategies tailored to the new audience, which can be costly.
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Payment difficulties: The company may face issues with foreign payment systems, currency exchange rates, or delays in receiving payments from international clients. These financial challenges must be managed effectively to ensure smooth operations.