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Riordan Manufacturing Strategy

In: Business and Management

Submitted By ellyponce
Words 2052
Pages 9
Riordan Manufacturing Strategy
FIN/370
University of Phoenix

Riordan Manufacturing Strategy
Determining the best approach for Riordan Manufacturing is vital to being prepared for expansion and future growth. Examining the potential of Initial Public Offerings, acquisition of another company, and a merger will assist with the decision making process.
Initial Public Offering
Initial Public offerings (IPOs) occur when a company first introduces their stock to the public. Upon selling the stock the company will receive money, which it can distribute internally. The stocks will then go on to the secondary market where the market price for the stock will be set through the buying and selling of the stock. The only time the company “ever receives money from the sale of one of its securities is when it is sold in the primary market” (Titman, Keown, & Martin, 2011, p. 322).
Strengths
IPOs carry little risk, which make them attractive to companies as a viable option for raising funds. Companies do not have to pay investors back after they by shares and a company who properly balances their debt and equity ratio can sell more stock with little or no flotation cost. By not having to incur debt as they would with a bank and not having to pay required interest or dividends, which would be the case with preferred stock or bonds, a company could free itself from a real obligation to the investors.
Weaknesses
When a company decides to go public it can be one of the most difficult processes.
When companies choose to go public the companies must meet the rules and regulations established by the Securities and Exchange Commission. Going public puts the company operations under close scrutiny. Going public is a costly, and the funds spent during this process are essentially lost. The pressure is applied to public companies to increase their current earnings. Public

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