Financing Strategy

Topics: Initial public offering, Decision making, Public company Pages: 6 (1859 words) Published: February 5, 2013
Financing Strategy Problem and Virtual Organization Strategy Paper
There are many options for expansion for a privately held company. The Huffman Trucking Company has options to expand the operations of the business. The three best options that the firm faces are; going public through an IPO, acquiring another organization in the same industry, or merging with another organization. With each of these being a possibility, there are some aspects that must be taken into consideration. First there are strengths of the option, as well as weaknesses. Each option also comes with its own opportunities as well as threats, which must not be over looked. While there are pros and cons to any decision that will be made as far as going forward is concerned, expanding operations is imperative to staying competitive in the business world this day in age. Weighing each option will allow The Huffman Trucking Company’s decision makers to come to the best conclusion when moving forward. Going Public through an IPO

An initial public offering (IPO) is a process in which a private company issues shares of stock to the public for the first time. Often times this process is known as “going public”. Regardless of how people refer to it though, it is extremely important for Huffman Trucking to consider this option for further expansion ("Encyclopedia Of Business", 2013). The strength in this approach is that it could generate revenues that do not have to be paid back. The initial purchasers of the stock are buying a portion of the company in hopes that the value will increase. Huffman Trucking can then use those funds to purchase new equipment, hire more employees, and more importantly to expand their service area in the United States.

However, there are weaknesses in this decision. The current ownership and management would lose a great deal of decision making power for the company. In an instant, the entire management team would have a group of stockholders to answer to. The knowledge savvy that got Huffman Trucking to where it is would become secondary to the whims of the stock holders.

The opportunities of this approach are many, but primarily, it would put Huffman Trucking on the map. Increasing the recognition and reputation of the company can go a long way to increasing revenues. Also, going public would create a financing climate for the company that would provide even more opportunity to gain investment monies (when needed) for further growth.

The major threat of this decision is that current ownership and management would be thrown out. If the stockholders felt that they knew better for the company, steps could be taken to get rid of anyone deemed detrimental to the company. This could mean that in a matter of years the original owner and every member of the original management team could be removed from the company. Acquiring another Organization in the Same Industry

Another option for Huffman Trucking is to acquire another organization within the trucking industry. Huffman trucking can already credit some of its growth in the past to acquiring other businesses, though each case is different and it’s important to consider the strengths, weaknesses, opportunities, and threats associated with another acquisition.

Acquiring another business can help Huffman Trucking to increase their efficiency and business. This is a known strength for acquiring another business, because they already have a location that they cover as well as a customer base, and their name is known, associating Huffman Trucking with that name will help their customers feel comfortable offering their business to Huffman. Depending on how Huffman is already staffed, a weakness of acquiring another business could be bringing on to many employees, or even having to let some of that company’s current employees go. If Huffman brings on those employees they have to make sure they have enough business to pay for all of their labor, and if they...
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