PRACTICE QUESTIONS BM

ROUTE 11 POTATO CHIPS

A) Less Access to Funds-Private companies have challenges when it comes to getting funds and
capital as they have less choices for fundraising relying on the shareholder resources

Less Liquidity-Private Companies are controlled by a small group of owners who may put rules
preventing who can become shareholders and take important roles in the organization, this might
also create a problem getting new external investors.

Flexibility: Private companies have freedom to prioritize the objectives without worrying much about
public concerns

B) Route 11 practices corporate social responsibility by,

 Using Certified Organic sweet potatoes

 Locally produced potatoes when possibly
 100% renewable hydroelectric power is used to run its factory.
 Waste potato peelings and rejects are fed to cows in the community.

C)Challenge-

Lack of resources: At the beginning, Route 11 Chips had no true factory, no distribution system, and
no brand recognition. This meant that to launch its products, the company had to make significant
investments in both infrastructure and marketing.

Opportunity-

Diversity: Route 11 apart from potato chips starting selling products to increase the brand
recognition like fridge magnets, hats, t-shirts and other items

Equipment Availability-The Company was quite lucky as a farmer approached the owner of tabard
inn with a huge supply of potatoes also due a small chips manufacturer shutting down, they could
easily acquire its equipment at a reasonable price.