Virtual Organization Strategy Paper

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  • Topic: Mergers and acquisitions, Initial public offering, Venture capital
  • Pages : 5 (1603 words )
  • Download(s) : 295
  • Published : January 15, 2011
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Huffman Trucking is a company founded by K. Huffman back in 1936. World War II helped Huffman Trucking to move forward increasing their demand between the Midwest ports all the way to the East Coast ports offering their carrier services. Huffman Trucking started with only a single tractor-trailer and nine years later the company increased their size to 36 trailers. The U.S. Government, manufacturers of plastics products, and electronic consumer products are some of the primary customers who Huffman Trucking works with. With facilities in Cleveland, Bayonne, St. Louis, and Los Angeles Huffman Trucking employs over a thousand personnel divided between drivers and support personnel. Team B analyzes the best option for Huffman Trucking between going public through an IPO, acquiring another company within the same industry, or merging with another organization. Comparing the strengths, weakness, opportunities, and threats of all three options will help Team B to make a smart decision. Strengths of Each Approach

Huffman’s Trucking has many advantages for a going public. The most distinct advantage is the financial benefit in the form of raising capital. Huffman’s capitals are to fund research and development, fund capital expenditure or even used to pay off existing debt. An increased public awareness of Huffman’s company is another advantage because IPOs mostly gain publicity by making potential customers aware of their products. This may cause an increase in market share for the company. Many companies have to cash in on the success of companies that they helped start-up using IPOs (Investopia, 2010). Advantages of Huffman merging and acquisitioning are to determine the short -term and long-term company strategic outlook of the new and determined company. This is many factors such as market conditions, differences in business culture, acquisition costs and changes to financial strength surrounding the corporate takeover (Berry, 2002-2010) A merger is justifiably simple and is not as expensive as the forms of acquisition are a primary advantage of the transaction. This is done because the firms agree to join their entire operations and to transfer the title to individual assets of the acquired firm to the acquiring firm (Williams, 2008). When companies merge, it reduces the number of competitors in the market and captures additional economic scales of the market. Merging will keep the company’s growth with the competitive advantages of both firms. Merger also enables the company to rebuild and strengthen the organization as firms involved in the transaction share strategies to make the organization stronger and more reliable, thus eliminate weaknesses in the firm. Weaknesses of each approach

Hoffman Trucking also has to be aware of the disadvantages of developing an initial public offering. The initial public offering can be a risky investment for Hoffman Trucking as well as for anyone that is looking to invest in him or her. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company (Investopia, 2010). The future values of the company going public are also of uncertainty. With no guarantee for the business or investor, the values of the stocks will eventually end. It is a risk that the business and investors will take with an IPO.

The option for an acquisition also has some weaknesses that go with it. If Huffman Trucking decides to acquire another company to expand, they need to realize this can be quite pricey as well. As Huffman Trucking discovers another company as they want to acquire that as, they will probably pay a premium price per share for the new company. This is done to make sure all shareholders of the acquired company are happy. This is the one of the few ways to able to let their shares go. It is very difficult to put appraise a company that...
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