Submitted by: Submitted by dpapercamp2012
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Category: Business and Industry
Date Submitted: 12/26/2012 11:17 AM
Virtual Organization Strategy
Finance for Business – FIN/370
Virtual Organization Strategy
Kudler Fine Foods is a private company exploring strategies to expand its business. The company is seeking expansion to increase profits and boost its product image. The three main strategies that Kudler is exploring are buying another company that still belongs to a similar industry, merging the company, or using an Initial Public Offering (IPO) to make the company public. To decide which option is the best for Kudler, the company will evaluate the strengths, weaknesses, opportunities, and threats associated with each option. The company will implement the option with the best results.
Going Public through an IPO Option
Kudler can find strengths and opportunities in each approach, whether going public through an Initial Public Offering (IPO), acquiring another organization in the same industry, or merging with another organization. The greatest strength and opportunity that Kudler Fine Foods has in going public through an IPO is the ability to raise capital quickly. A rule of finance is that if possible, a company should spend money from other companies instead of its own. This allows the company to use someone else’s money to pay off its debts, invest in the company in different ways, and grow the business. Another strength and opportunity of an IPO for companies is that it can enjoy legitimacy for all its stakeholders including the employees, customers, suppliers, and competitors. An IPO is also a good way to garner publicity, which increases the company’s profile among investors and consumers alike (Investopedia, 2010.).
An IPO generally provides many promising benefits for the company, but at the same time entails some threats and weaknesses. After the IPO occurs, the company will have to answer to stockholders from that point forward because ownership is dispersed among all the stockholders and not just the owner. Some companies are still reluctant to...