Section A-Case Study (40% Cutie Pet Care is a partnership that was set up several years ago by Ken and Jerry. It is a local shop specializing in providing a variety of pet care products and services for pet owners. With a good quality of diverse services and pet care items, plus the innovative promotion tactics and creative advertising, the business has been growing with a stable customer base. After several years of development, it has many branches located in different districts of Hong Kong. In view of the growing trend that Hong Kong people prefer to own pets is growing, Ken is ambitious and wants to expand the business quickly. To meet capital needs, Ken suggests, "Perhaps we can consider turning the partnership into a private limited company." Jerry responds, "Being a private limited company will be subject to stricter government regulations and adding extra administrative cost. We may consider merging with other pet shops to expand our scale. Both parties will contribute capital with operating the pet shop." Ken agrees and adds, "Good idea. However, I think we need to devise some control systems for managing our new pet shop. Since our strength lies with good quality of services and products, its operations should be closely monitored under our control systems to maintain high standard of products and services." In addition, Ken and Jerry find out that the employee turnover rate is rather high. Despite the fact that employees have been paid above the market rate and provided with excellent benefit, they do not work long for the pet shop and quit quickly. Ken and Jerry think that they have already given their employees sufficient job responsibilities and clear job instructions, but it seems that employees nowadays demand something other than a competitive compensation package Questions: (a) Identify four factors in turning the partnership into private limited company (8 marks) (b) Describe the type of Merger suggested by Jerry. Suggest three benefits for Cutie Pet Care in adopting the Merger. (12 marks) () Define the major steps in controlling the operation of the new pet shop to ensure high quality standard. (10 marks) (d) Other than a competitive compensation package, propose four ways to motivate their employees to reduce employee turnover. (10 marks) Total: 40 marks