Explain one reason why a sole trader who makes specialist cakes may decide not to change into a partnership. The business has a strong local reputation, but...
Question 1 Report
Explain one reason why a sole trader who makes specialist cakes may decide not to change into a partnership. The business has a strong local reputation, but the owner is worried that another person could change recipes and reduce food quality.
(a) Identify the ownership structure the cake maker currently has. [1]
(b) Explain one reason why remaining a sole trader could protect the business's quality. [2]
(c) Which stakeholder may be most concerned if cake quality falls? [1]
Answer Details
(a) The cake maker is a sole trader (sole proprietorship). [1]
(b) By remaining a sole trader, the owner retains full control over recipes and production decisions. [1] This helps maintain a consistent quality standard and protects the business's local reputation. [1]
(c) The stakeholder most likely to be concerned if quality falls is customers. [1]
Exam focus: The key issue is control. Adding a partner may provide skills or finance, but it also means the original owner no longer has sole control over quality-related decisions.
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