University of Phoenix
Financing for Business
Baderman Island Expansion
Several methods of expanding a company exist. The Baderman Island resort is looking into different options to expand their operations. This paper will explore the subject of the three main options; acquiring another organization in the same industry, going public through an Initial Public Offering (IPO), and merging with another organization. Additionally, it will provide analysis of the strengths, weaknesses, opportunities, and threats (SWOT) of each option. Finally, it will provide a recommendation regarding which would be the best option for Baderman Island Resort to use to expand its operations.
Baderman Island Resort may expand its operations by acquiring Atlantis Resorts to increase growth and market share. Baderman Island would have to purchase Atlantis Resorts stock or assets. This expansion strategy has strengths, weaknesses, opportunities, and threats. The strengths of an acquisition include the potential to acquire more revenue to lead to yet more growth. Other strengths include financial leverage, lower cost of operations, and increased market share. The weaknesses of acquiring Atlantis resorts include the high cost of acquisition, intangible costs, legal expenses, and possible devaluation of the organization. Opportunities created by the acquisition include the additional resources provided by the Atlantis. Expanded productivity also results from a successful acquisition. Threats also exist in an acquisition strategy. Management of the two companies often struggle over who will run the organizations and its departments. An acquisition also creates higher employee turnover because of employees unhappy with the new organization. This in turn creates hiring costs. IPO Offering
To expand their resort operation, Baderman Island may explore various financial opportunities to achieve their strategic goal. The first option...