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S-Corp Limitations for Graeter’s

Graeter’s has established a flourishing business in its target setting, attracting as many audiences with as much diversity as possible. However, having reached the current success rate, the company might want to consider expanding or, at the very least, changing its status to a corporation. However, accepting the title of an S-corporation will imply dealing with certain limitations, such as the limitations of stock ownerships and a substantial loss of flexibility in managing finances. Namely, in an S-corporation, an owner is expected to have a single class of stock, which may create additional impediments to Graeter’s development.

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C- Corp Limitations for Graeter’s

A C-corporation implies quite a several challenges to address, even though some alterations imply minor advantages. By choosing to transfer to the setting of a C-corporation, Graeter’s will have a broader range of options for protection against creditors’ claims (Szycher, 2018). However, the specified benefit comes at a significant cost of a massive tax on the distribution. Specifically, owners of C-corporations are expected to pay a personal income tax. For Graeter, the specified change is quite undesirable given the restrictions under which the company is operating, namely, the limited amount of product that it can supply. Since Graeter has sacrificed quantity for quality, it needs to select the environments in which it can uphold the specified standard.

Strategic Alliance Opportunities

Another option that Graeter’s can consider presently, a strategic alliance offers quite a range of opportunities for the company to expand. Namely, a strategic alliance offers an opportunity to reduce costs by splitting them with the partner (Szycher, 2018). Moreover, a chance to collaborate with organizations that used to be Graeter’s rivals is introduced with the acceptance of the strategic alliance option. However, the specified choice will also entail a significant loss of control over the management and production processes (Szycher, 2018). The described outcome will imply that Graeter’s may have to share its production secrets with rivals, which will cost the company its competitive advantage.


Szycher, M. (2018). Szycher’s practical handbook of entrepreneurship and innovation. CRC Press.

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