Writing an A-Level Business Studies Essay on Remaining a Private Limited Company

This guide provides you with the necessary steps and tips to write a successful A-Level Business Studies essay exploring why a business might choose to remain a private limited company instead of transitioning to a public limited company. Here's a breakdown of the process and key elements to include:

Understanding the Essay Question

Before you start writing, thoroughly understand the essay question. You need to identify the key terms and concepts. In this case, you're examining the reasons behind a company's decision to stay private while exploring the advantages and disadvantages of both private and public limited companies.

Developing Your Argument

Your essay should present a clear and logical argument. Here's a framework you can use:

Introduction

Start with an engaging introduction that clearly states the essay's focus. Define the terms "Private Limited Company" and "Public Limited Company" to ensure your reader understands the context. Briefly outline the key factors that might influence a business to remain private.

Main Body

This is where you develop your argument with supporting evidence. Consider the following points, providing examples where appropriate:

Reasons for Staying Private

• Maintaining Control: This is a major factor. Private limited companies are often controlled by a small number of shareholders, typically family members or founding partners. Going public would dilute their ownership and control, potentially leading to a shift in management decisions.
• Preserving Values and Culture: The founders may be deeply invested in the company's unique culture and values. Going public could introduce external influences that might compromise these aspects.
• Alternative Sources of Finance: Companies can raise capital from venture capitalists or private investors without going public. This allows them to maintain control and avoid the scrutiny associated with public markets.
• Flexibility in Investment and Dividends: Private shareholders may be more willing to reinvest profits back into the business rather than demanding high dividends, which can hinder growth.
• Avoiding Public Scrutiny: Public companies are subject to more stringent regulations and public reporting requirements. This level of transparency can be burdensome for some companies, especially those with sensitive information or a desire for privacy.
• Lack of Public Market Readiness: Companies might choose to remain private if they are not financially stable or prepared for the demands of public markets. For example, they might be making losses or have a limited track record of success.
• Limited Growth Aspirations: Some businesses simply have no intention of expanding significantly. Public markets may not be a suitable platform for their relatively small scale.
• Avoiding Costs and Hassle of Going Public: The process of issuing shares and complying with regulatory requirements can be expensive and time-consuming.

Counterarguments

Although there are benefits to remaining private, it's important to acknowledge the potential downsides. Briefly discuss the limitations of private companies, such as:

• Limited Access to Capital: Public companies have access to a wider pool of investors, potentially allowing for larger capital raises.
• Enhanced Company Reputation: Going public can enhance a company's reputation and attract talent by showing that it is a well-established and successful business.

Conclusion

Summarize your key arguments and restate your main point. Conclude with a thought-provoking statement that leaves the reader with a final impression.

Tips for Writing a Successful Essay

• Research Thoroughly: Consult relevant business textbooks, academic articles, and reliable online resources to gain a comprehensive understanding of private limited companies, public limited companies, and the factors influencing their choices.
• Use Real-World Examples: Illustrate your points with relevant examples of companies that have remained private or went public.
• Critical Analysis: Don't just present information; critically analyze the advantages and disadvantages of each approach.
• Clear Structure: Organize your essay with clear headings and subheadings for readability.
• Proofread Carefully: Before submitting your essay, proofread it thoroughly for any errors in grammar, spelling, and punctuation.

Additional Tips

Remember to address the specific requirements of the essay question and consider the following:

• Focus on the specific context provided in the question: Pay attention to any context provided in the essay question, such as the size of the business or its industry.
• Use relevant economic and business concepts: Demonstrate your understanding of business principles and theories to support your analysis.
• Avoid vague generalizations: Use specific and relevant examples to support your claims.
• Balance your argument: Ensure that you present a balanced perspective, considering both the pros and cons of remaining private.

By following the guidelines and tips outlined in this guide, you can write a well-structured and insightful essay on the reasons why a business might choose to remain a private limited company.