Virtual Organization Strategy - Paper

Topics: Mergers and acquisitions, Venture capital, Initial public offering Pages: 4 (1402 words) Published: April 18, 2011
Virtual Organization Strategy Paper
Melisa O’Neal, Nathan Reade, Jamie Vazquez, Scott Marquez FIN 370
April 4, 2011
Thomas Rietta

Virtual Organization Strategy Paper 
Kudler Fine Foods was founded in June 1998 by Kathy Kudler. Within nine months the store reached the break-even point and showed a profit by the end of the year. In the next five years Kudler Fine Foods would expand to three locations and has proven to be a profitable business. Currently, Kudler Fine Foods is a privately owned business but needs to expand. Three methods of expansion will be analyzed by SWOT analysis and feedback will be provided for a recommendation of the best method of expansion. Going Public through an IPO

Two strengths exist as reasons for Kudler Fine Foods to go the initial public offering (IPO) route. One reason is because it is a good way for the company to raise capital (Keown, et al., 2005). This capital can be used for the company to invest in projects or even pay off debt. Another reason to go the IPO route is that it can increase the company’s business. The word spreads about companies that trade publicly, and this often encourages people to bring their business to the company as well as encourages suppliers to want to supply the company with goods (Keown, et al., 2005). Weaknesses

An IPO has many inherent and potential weaknesses that must be examined prior to selection as a means for expansion of Kudler Fine Foods. IPOs are very expensive undertakings, and a large portion of any capital acquired will be lost to this cost. Legal liability is important when conducting an IPO and those offering the shares can be personally sued. The expense continues after the company goes public with SEC reporting requirements. Kathy Kudler will not only lose control of some of the decision-making for Kudler Fine Foods with an IPO, but she will also lose some of the profits, as a portion will go to shareholders. Kathy likely cannot sell her shares if she is...
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