Ownership of the business
Safeway is a public limited company (Plc), meaning their business has shares for the public to buy on the Stock market. Shares of the company can be floated and then traded on the stock market. Therefore any member of the public can become the owner of their part of the company. This also means shareholders who own part of the company’s share are taking a risk, such that if the company are suffering from any financial losses and goes in to liquidation, that shareholder will be in loss.
However, the owners have legal liability to only the value of their initial investment, therefore the owners cannot be forced to surrender personal wealth. They could offer their share to the public through Stock Exchange. There are advantages and constraints of Safeway being a public limited company (Plc). The advantages are, The greatest advantage of Safeway being a public limited company is that, owners have limited liability which means that owners are not liable to the company’s debts, only their initial investments into the company.
Safeway being one of the major retail stores in the UK, take the form of multiples (company with many branches and stores), which have steadily grown over the years by acquiring other new stores. This is though issue of shares for sale in order to acquire capital for expansion to fund new projects, instead of only relying on the sales of groceries. Safeway being a public limited company acts as an advantage in terms of suppliers, because suppliers are likely to offer listed companies with more attractive credit facilities, this is because they will be thought less likely to default on payments than private limited companies.
Safeway being a public limited company will be regarded by lenders as representing a lower risk investment than a private limited company. They are therefore likely to benefit from smaller interest charges on any loans obtained. Also being a listed company, Safeway has found it easier to raise their finances than if they were a private limited company. The standing of Safeway’s own market, both with customers and suppliers may be enhanced by a Stock Exchange listing.
Finally, Safeway has Divorce of ownership and control, meaning shareholders are the owners of the company, but they do not make decisions on a day-to-day basis. Many will have little detailed knowledge of the firm’s operation. This acts as an advantages because shareholder will not be involved, therefore there will not have any disagreement with the decisions that are made by the owners and will not result into damage on the business. While constraints of Safeway being a public limited company (Plc) could be,
Safeway must keep a wide range of people informed about their financial performance. As a result it will face greater administrative costs and also sensitive data will be available to the public and competitors. And Safeway being one of the quoted companies, which is tracked each day, is referenced in the London Stock Exchange listings published in the financial pages of most newspapers. The cost of floating the company on the Stock Exchange is high. Some of the out lay is fixed and therefore heavily on small issues.
This makes Safeway gaining listings more cost effective as the size of their company increases. It is expensive to set up because of reasons such as legal requirements. A public limited company needs to be registered with the Registrars of Companies, which have regulations that the company needs to abide by, that is the rules of the Stock Exchange. there has to be an annual general meeting (AGM), where directors need to report to shareholders, where decision are made and shareholders can disagree with their decisions if not satisfied and also put forward on their own suggestions or decisions.
The extent to which any one individual or group can maintain control of Safeway is severely limited by sales of its shares on the Stock. For example, a family may find their influence on a business diminished when a listing is obtained. In turn, this means that publicly quoted companies are always vulnerable to a takeover bid. This might affect the decisions taken by directors. For example, they may be more inclined to cut back on staffing during a recession, whereas a private company would want to hold on to experienced staff for when the economy starts to recover.