Virtual Organization: Riordan Manufacturing
Learning Team B
August 3, 2013
FIN370
Prof. Putnam, Richard

There are many factors of strength that can be found in a company who’s going public, as well as the company understands that with going public, their real capital can be created. This capital can allow more money to go towards research and development, pay for current capital expenditures, or even help pay off existing debts (Investopedia, 2009).
When an organization is publicly traded, this means that the public can notice a company on a much larger scale, than they would have in the past. There now is future potential of investors finding out of a company’s growing successes where they might not have heard of before as with the numbers being public, the success of the company also is shared (Investopedia, 2009).
Another potential strength of going public is that of entrepreneurs if looking for a way out, or merely a way to cash out on a successful growing company, it’s a way to gain on that success. (Investopedia, 2009) <-THIS NEEDS MORE SENTENCES Although there is much strength to going public through an IPO, there are also many weaknesses. As we choose to go public we will have to consider the challenges of fully disclosing our company information for investors and publishing our financial records to be in accordance with Securities Exchange Act of 1934. In addition, we need to consider the added cost of complying with additional government regulations as stated in (Investopedia, 2009) it states, “Public companies are regulated by the Securities Exchange Act of 1934 in regard to periodic financial reporting, which may be difficult for newer public companies. They must also meet other rules and regulations that are monitored by the Securities and Exchange Commission (SEC). More importantly, especially for smaller companies, is the cost of complying with regulatory requirements can be very high. These costs have only increased with the advent of the Sarbanes-Oxley Act.”
(OPPORTUNITIES GOING IPO)-JEFF M Many large firms an organizations are not comfortable with going public with an IPO for the fact that they do not know what stocks will do on it’s very first day. Either the stock may sell quickly or the stock may not sell at all. When a company also goes through with a public IPO, there will be no historical data on that company, making decisions on purchasing stock quite difficult. A few other reasons that we took into consideration with going public through an IPO are: * Now having to answer to shareholders * Subject to SEC and SOX regulations, which equal time consuming. This would result in withdrawal of credit from organizations suppliers, falling stock prices, and a low evaluation of the company by SEC. * Forced disclosure to the public, which will put strain on temporary growth, increase costs, place restrictions on management, and cause former company owners to lose control of the decision making process within the company.
With acquiring another company in our same industry this can aid in reducing costs for our company as the larger the company there can be a cost reduction as there is increase efficiency in acquiring a organization. We can also reach out now to a new market where our company had not be a part of but the acquired company could also expand us into an acquired market as well (Bank, 2013).
Though there are other potential benefits of acquiring such as reducing our company’s tax liabilities though this may be limited based on the current standings of our company and shouldn’t be the sole purpose of acquiring (Bank, 2013). <-NEEDS MORE SENTENCES
As previously discussed there are many advantages to acquiring another organization in the same industry, however it also has it weaknesses. As there are tax advantages to acquiring another company there are many laws in place that my limit those benefits and may not make it advantages to acquire the organization. In addition there may be some differences in the areas or markets even if they are in the same in industries as the example stated by (Bank, 2013), “such as if a clothing store that traditionally caters to older women acquires a company with appeal to teenagers. This extended reach can be lucrative, but can also be difficult if the company fails to understand its new market, for example.” Also there is the case of market for example if a west coast company acquires an east coast company there will be differences in markets and cultures that will need to be accounted for.
(OPPORTUNITIES FOR ACQUIRING)-JEFF M. There is nothing more tedious and annoying with double efforts in acquiring a company of the same industry. Many of the threats that we would be facing if such thing were to happen would be: * Duplication of efforts between the management and departments * If and when management and departments merge, there can be a high chance of layoffs that will affect employee moral. * Culture conflict would be very high due to the fact that we may have been two competing companies. * We may have to pay a larger price to acquire this new company.
While merging with another organization can also reduce costs like being publicly traded could, a merger also creates more purchasing power by lowering costs of materials. Sharing offices or factories can save other costs. As well as sharing facilities mergers would allow each company to work in each other’s markets, expanding and diversifying the range of products that can be sold or provided to each company’s current customers. Another thing combined is that of the top contributors in the work force though this does mean the not so great contributors also though these might be the first to be noticed and let go, therefore increasing the lowering of costs and increasing those top minds (Schamotta, 2013).
In addition to the advantages of two companies merging there are also many disadvantages or weaknesses. When two companies merge we have to combine two brands and cultures. Combining these cultures can be difficult not only within the company, but also with the company’s customers. In merger we are also combining company images, which could become problematic as we see in the example stated by (Clark, 2013),” For example, if an environmentally friendly soap company were to merge with an industrial detergent manufacturer with a poor environmental track record, it may alienate the customers of the environmentally friendly soap company who don't want to support a company that is not environmentally responsible.” In addition merger may also increase costs and coordination costs may increase and may also lead to layoff thus effecting employee morale.
(OPPORTUNITIES FOR MERGER)- JEFF M Merging with another company is something we may be able to do here at Riordan Manufacturing in order to expand our business. Taking into consideration with the expansion of our company, we must also understand and be willing to accept the threats that may come with them. Merging with another company in the same industry as ours can cause employees of both companies to resist the change. If all employees from both companies do not accept the merge, it will more than likely create difficulties for the company due to employee resistance that may have an effect on customer service. Another threat with merging both companies is that the new upper management may not have the same aspects and outlooks on the new merged company. There will more than likely be employee cutoffs and layoffs due to two individuals holding the same exact position. Regardless of the decision that Riordan Manufacturing will have to face in consideration to merging, we must now consider the threats carefully.
(EFFECTS OF GLOBALIZATION)- ALLY
There are six main factors that must be considered when dealing with international exchange rates; inflation, interest rates, deficits, public debt, term of trade, and political & economic performance of the countries you are dealing with (Investopedia, 2010).
Low inflation means purchasing power. Whereas the more debt a country has the cheaper the future currency may be worth, with a lot of risk of debt affects the exchange rate. Deficit spending more than earning lowers exchange rates and the demand of its country’s goods. If a country is strong economically this draws in investors as more confidence in the currency means confidence in the potential for a stable investment (Investopedia, 2010). Key is stability; stable rates mean less risk.
(MITIGATING EXCHANGE RATE RISK)-JEFF

Bank, C. (2013). The Advantages & Disadvantages of the Acquisition of Another Company in the Same Industry. Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-acquisition-another-company-same-industry-31362.html
Investopedia. (2009, February 26). What are the advantages and disadvantages for a company going public? Retrieved from http://www.investopedia.com/ask/answers/06/ipoadvantagedisadvantage.asp
Investopedia. (2010, July 23). 6 Factors That Influence Exchange Rates. Retrieved from http://www.investopedia.com/articles/basics/04/050704.asp
Schamotta, J. (2013). he Advantages of Company Mergers. Retrieved from http://smallbusiness.chron.com/advantages-company-mergers-22476.html
Clark, W. (2013) The Disadvantages of Merging Companies. Retrieved from http://www.ehow.com/info_8199594_disadvantages-merging-companies.html

Investopedia. (2009, February 26). What are the advantages and disadvantages for a company going public? Retrieved from http://www.investopedia.com/ask/answers/06/ipoadvantagedisadvantage.asp