Phase 3 Individual Project
By: Mayra Leandre
Strategic Management in Dynamic Environments
July 28, 2014
In the last meeting that we had with Deborah she informed to us that we needed to do a little more research in regards to different strategies that our company should use in expanding the brand. In this report we will talk about two different things that our company should do in order to ensure that our product advances and makes the company a better company and makes the owners some more money. The first thing that we will discuss is the possibility of buying smaller companies that build the same type of furniture. The second thing will be discuss is the possibility of buying a company that has the equipment that we need but is going out of business.
Buying a small business to make your business bigger or more profitable comes with its ups and downs. Knowing these pros and cons will help the company decide whether or not it will be worth it to acquire these new assets. There are a few steps that need to be taken when considering this proposition. We must identify the interest. We must ensure that we make a list of the possible companies that we would like to buy. These companies should be able to make us a better company. We should consider the talents of both our company and the talents that we will be receiving with the new company (SBA.gov, 2014). Next the company should consider whether or not the new business acquisition has a condition that is unfavorable to us, for example location or the time commitment. There are many favorable aspects to buying an existing business such as drastic reduction in startup costs. You may be able to jump start your cash flow immediately because of existing inventory and receivables (Ennico, 2014). There are also some downsides to buying an existing business. Purchasing cost may be much higher than the cost of starting a new business because of the initial business concept, customer base, brand and other fundamental work that has already been done. Also, be aware of hidden problems associated with the business like debts the business is owed that you may not be able to collect (SBA.gov, 2014).
The making of furniture takes having the best machines available. While these machines can get very expensive there is a way that our company can buy these expensive machines at a reasonable price. The best way to do is to buy them from a business that is going out of business. These businesses are trying to sell their remaining stock and will sell them at a lower price than they are actually worth. This will benefit our company because we will get new machines for used or even lower than used prices. Asset buyers are getting the company’s physical equipment, facilities and customers, as well as intangibles such as trademarks and goodwill, and as a result are generally protected against prior claims against the business. For example, the previous owners would most likely be responsible if an environmental claim were made against their former property or if an employee hired on their watch filed some sort of lawsuit (Wall Street Journal, 2013). There is always a possibility that some machines may not be worth it but that is a chance that we as a company must take to get things that we need to continue making money. While we always hope for the best some of these investments or acquired businesses may not make our company better.
There are many reasons as to why a company must have more than one strategies in mind when trying to pursue a global expansion. One of the most important one is in case one strategy fails there is always another one to depend on. Every company should have a plan A, plan B, even a plan C to fall back on in case the plan before that didn’t work out. While we all hope that the first plan always works out, that is not life. To win at anything worthwhile,...
References: Ennico, C. (2014). Entreprenuer. Retrieved from Entreprenuer: http://www.entrepreneur.com/article/195020
Mind Tools. (2013). Retrieved from Devloping Your Strategy: http://www.mindtools.com/pages/article/developing-strategy.htm
SBA.gov. (2014). Retrieved from The U.S Small Business Administration: http://www.sba.gov/content/buying-existing-business
Wall Street Journal. (2013). Retrieved from Ways to Cash out of Your Business: http://guides.wsj.com/small-business/buying-and-selling-a-business/how-to-choose-the-right-way-to-cash-out-of-your-business/
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