M1A1 Mini Case: The McGee Cake Company
Mini Case project
College USA, NY
This paper was prepared for Principals of Finance BUS350 taught by
There are many alternate ways of conducting business for McGee Cake Company. This has been a quick growing company founded in 2005. This started as a part time business for Doc and Lyn McGee. With being a part time company this was not the focal point of the McGees as they both worked full time jobs. They have now turned this into their full time job/business in 2010. This has caused them make some very quick and spontaneous decisions with their booming business that can impact the overall long-term efforts of the Cake Company. Currently being a sole proprietorship we are looking at the advantages and disadvantage of changing to a Limited Liability Company (LLC) or turning into a Corporation. I first would like to recap on the current situation that has put us at this decision point. First, additional workers were hired to keep up with the high demand of orders. The high demand has lead to a cash flow and capacity problem. Secondly, they have been approached by a national supermarket chain that would like to put all four cakes made in their stores. I feel that this is a good idea as the company name is being marketed (additional outside orders) if the proposal is agree upon to supply the supermarket. Last, a national restaurant chain would like to sell McGee Cakes in its establishments without using the brand name. This is an issue as the cakes are being provided to the restaurant chain there is no marketing for the company. This could limit the option to expand in the future or McGee’s could charge royalty fee to the restaurant for selling without the brand name. The Chess cake is the specialty cake that has truly developed the company name being their signature cake (p19). These facts are important as we go into the decisions to be a LLC or a Corporation (Ross, S. A.,...