Business Report: RipSilver
...They are not listed on the Stock Exchange. The right of shareholders to transfer or sell their shares is restricted. These companies have ‘ Pty Ltd’ after their name. Legal Entity Recommended for Rip Silver The main disadvantage of both the sole trader and partnership entities is unlimited liability. If the business cannot pay its debts, creditors have access to the personal possessions of the owners. These can include the family home and car. The private company has limited liability. This means that Rip Silver’s liability is limited to the unpaid value of any shares you might hold. For this reason, it is strongly recommended that Rip Silver uses the private company as a legal entity to run the business. The Business Life Cycle The business life cycle refers to the phases of development a business goes through during its lifetime. Typically the business evolves through four major phases of development: establishment, growth, maturity and post-maturity. • The Establishment Phase: This is when the business is set up. It can be a difficult stage because a business has to find buyers for its products. Customers often resist products they are not familiar with. Quite often a new business will experience negative profits (losses). If the new business is competing against well-established businesses, it may have difficulty winning new customers. Even if the product is news and does not face direct competition, customers may not be away of its existences or be reluctant to experiment. • The Growth Phase: This stage is characterised by greater customer awareness of the business’s products. At the same time, there is typically an improvement in quality of products and the development of new products. There is a rapid increase in sales. This can sometimes cause problems associated with the rapid expansions. There is a high level of innovation as people work out better ways of doing things. Problems come when growth takes off. The informal management systems do not provide the direction and control a rapidly growing business needs. • The Maturity Phase: In the maturity phase the business reaches adulthood. Sales tend to level off because of the higher levels of competition as more competitors enter the market. Now is when you focus on improving efficiency so profit margins can be maintained as prices fall. • The Post-Maturity Phase: In the post-maturity phase, the managers will try to revitalise or renew the business. This means they will take actions to ensure innovation in the business. They will try to develop new and more efficient ways of making products and delivering higher levels of customer service. Rip Curl Business Life Cycle In the beginning, Rip Curl Surfboards did well in a highly competitive market. With only two staff and low profits. In 1970 they had realized that there business wasn’t going so well. They made a decision that changed the company. They were looking at the needs of their fellow cold-water surfers, they branched in to the world of wetsuits. At the time only two companies were manufacturing wetsuits. This is known as innovation. It was about here when Rip Curl had moved up to the growth stage, in late 1967, when they were hit by another company, known as the 'Fantastic Plastic Machines', who were the hottest selling boards in the country. Though after a few months, Fantastic Plastic Machines were not going so well as it could not sell boards to surfers out of New South Wales. This was when the boys, with plenty of boards in their possession, now needed a name. ‘Rip Curl' was really ap...