Good Health Medico (GHM)
Good Health Medico (GHM) owns a chain stores to sell medicines and clinical equipment. GHM has long term contracts with many private hospitals and medical stores across India. However, their dominance is in 3 to 4 South Indian states. GHM is owned by motor giant Beeta Motors, which is a public limited company, whose shares are listed both in Indian stock exchange as well as foreign stock markets.
GHM
has been planning go public to raise funds for expansion. The management’s aim is to become super power
in the field of medicine and establish their dominance in in Northern states of
India.
GHM’s mission statement is “Our mission is to develop and supply pharmaceutical products at affordable rates to sustain health and prosperity for every Indian citizen’. GHM’s vision statement is “Our vision is to be a leading pharmaceutical company in India with research, development and supply of medical needs”.
Questions
a)
What is a publicly held company [2]
b)
What is a privately held company [2]
c)
Outline two differences between a
partnership and a publicly held company [2]
d)
Explain two advantages for GHM going
public. [4]
Suggested
answers
b) A
privately held company is a business whose shares are not traded on a public
stock exchange. Ownership is limited to a small group of individuals or
entities, and it is not required to publicly disclose its financial
information.
c) A
partnership is owned by two or more partners who share profits and usually have
unlimited liability, and its ownership cannot be traded publicly. In contrast,
a publicly held company is a separate legal entity with limited liability for
its shareholders, and its shares are traded on a public stock exchange,
allowing it to raise large amounts of capital.
d) Two advantages for GHM going public are:
Access to large capital – By issuing shares to the public, GHM can raise substantial funds needed to expand its operations and establish dominance in Northern states of India, supporting its vision to become a leading pharmaceutical company.
Enhanced brand image and credibility – Listing on the stock exchange will increase GHM’s visibility and reputation, attracting more hospitals and medical stores across India to partner with them, reinforcing their mission of supplying affordable pharmaceutical products.
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