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1.
Horbury Diversifications plc's decision to diversify into several new markets, such as electronics and toy
manufacturing, may have contributed to the decline of its share price in February 2014. One possible reason
for the decline in the company's share price is the lack of experience and knowledge in the electronics mar-
ket. According to the context, profits were affected by low sales of electronic items in the UK when the
economy was weak. This suggests that the company did not have the necessary expertise to navigate the
challenges of the electronics market, leading to a decline in sales and profits.
Another possible reason for the decline in share price could be the overall weakness of the economy at the
time. As the context mentions, the UK economy was weak in February 2014. This could have led to lower
demand for Horbury Diversifications' products, resulting in lower sales and revenue. In addition, investors
may have been hesitant to invest in a company that was diversifying into new markets during an economic
downturn.
Furthermore, the company's share price may have been affected by fluctuations in the stock market. Stock
prices are subject to a variety of factors, including market trends, investor sentiment, and company perfor-
mance. Even if the company was performing well, external factors such as political or economic uncertainty
could have negatively impacted the share price.
In conclusion, the decline in Horbury Diversifications' share price in February 2014 could be attributed to a
combination of factors, including the company's lack of experience in the electronics market, the overall
weakness of the economy, and fluctuations in the stock market. To avoid similar situations in the future, the
company may need to carefully consider its diversification strategy and ensure that it has the necessary ex-
pertise and resources to enter new markets successfully.
2. To evaluate whether a private limited company would be a better form of organisation for Horbury Diver-
sifications, we need to consider the advantages and disadvantages of both types of companies. A private lim-
ited company is a business structure where the company is owned and managed by a small group of people,
and the liability of the owners is limited to the amount of money they have invested in the company. On the
other hand, a public limited company is a business structure where the company's shares are publicly traded
on a stock exchange, and the liability of the owners is limited to the amount of money they have invested in
the company.
One of the advantages of a private limited company is that it provides more control and privacy to the own-
ers. By buying back the company and turning it into a private limited company, the board of Horbury Diver-
sifications will have more control over the company's decision-making processes and can keep sensitive in-
formation private.
a private limited company is often considered to be more flexible and agile than a public limited company.
As a privately owned business, Horbury Diversifications would be able to make decisions more quickly and
easily, without the need to consult with shareholders or comply with complex regulatory requirements. How-
ever, there are also some disadvantages to becoming a private limited company. For example, a private lim-
ited company may have limited access to capital. Unlike a public limited company, a private limited com-
pany cannot issue shares to the public, which can limit its ability to raise funds. This could be a challenge for
Horbury Diversifications if it needs to raise significant capital to finance its diversification strategy.
Another potential disadvantage of becoming a private limited company is that it may be more difficult to at-
tract and retain top talent. Public limited companies often offer employees the opportunity to own shares in
the company, which can be a powerful motivator. By becoming a private limited company, Horbury Diversi-
fications may need to find other ways to incentivise and reward its employees. In conclusion, whether a pri-
vate limited company would be a better form of organisation for Horbury Diversifications depends on the
company's specific circumstances and objectives. While a private limited company can provide greater con-
trol and privacy, as well as more flexibility, it may also limit the company's ability to raise capital

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