Virtual Organization Strategy Paper Essay Example for Free

Virtual Organization Strategy Paper Essay 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 has not gone public. This is when Huffman Trucking will have to show how bad they want a company by how much they offer to the company. A merger may sound appealing as well but also has weaknesses. A merger is not as easy as it may seem. The merger must benefit both companies looking to come together. If one may benefit more than the other, the other may look for other ways to demand more for their business. With this it is tough to decide who and how many shares each merging benefactor should receive when finished. This is about coming to an agreement which is not always as easy as it may seem. Each business has an idea of what their business is with the other merging business may not see it the same way. Opportunities of each approach What Huffman Trucking has an opportunity to do is to invest in projects so they can sell their securities in exchange for cash. Because the company is growing this will financially give them funding to use so their projects will produce assets that will be immediate. What this will do for them is to grow IPO rapidly and bring more revenue with acquiring the funds to produce with new projects. Because Huffman Trucking is a business in the transportation industry this could acquire another company is the same type of business. Many transportation companies in the country they could merge with so their industry would be on big corporation. They could not do without the transportation industry otherwise the public would be without these products. If Huffman Trucking merges with another transportation company they would combine all of their trucks with many others with the east coast and the Midwest. This could make their company and other transportation companies much more successful to expand all over the country. Their mission is to be more profitable so they could adapt very well with any other company in the transportation industry today. Threats of each approach The threats that Huffman Trucking must prepare for whether they choose to go public through an IPO, acquire another company in the same industry, or merge with another organization. The threats that Huffman would face with going public through an IPO would be individual investor would not be able to predict what the stock or shares will do on its initial day of trading and in the near future because of the lack of historical data. Most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value. Another threat to an IPO would be when a private limited company such as Huffman Trucking becomes a public company; it is subject to more regulation and rules of the State. If Huffman Trucking chose to acquire another company in the same industry the potential for financial loss would be initially because of factors such as expenses for consolidating brands, quipment, and merging the organizational structures. Management styles, employee expectations, processes, and cultures must be also because the employees of acquisitions will ultimately drive performance, consume payroll dollars, and be the most from an acquisition. This is a huge threat to acquisitions because of the affect of not addressing these issues will slow and perhaps stop the integration process and be costly in both sales and profits (Boyer, 2010). Mergers also have threats that must be taking into consideration. According to Wests Encyclopedia of American Law, whether a forward or backward integration, the newly acquired firm may decide to deal only with the acquiring firm, thereby altering competition among the acquiring firms suppliers, customers, or competitors. Suppliers may lose a market for their goods, retail outlets may be depriving of supplies, or competitors may find that both supplies and outlet are not receiving what they need. This raises the concern that vertical integration will foreclose competitors by limiting their access to sources of supply or to customers. Vertical mergers may also be anticompetitive because their entrenched market power may impede new businesses from entering the market. Conclusion Huffman Trucking started business 74 years ago and works with big companies and with the US Government. Team B analyzed the best option for Huffman Trucking between going public through an IPO, acquiring another company within the same industry, or merging with another organization. Team B concludes that even though the IPOs are excellent to gain publicity by making potential customers aware of their products, the company is already known by big companies. Huffman Trucking is currently in a stage where their priority should be to expand their business. The decision to enhance the company is to either acquire within the same industry or merge with another organization. Team B recommends Huffman Trucking to acquire another company, expand their business, reduce the number of competitors in the market, and capture additional economic scales of the market. Team B considered the threads of all three options and acquiring another company is the best option for Huffman Trucking to move forward and gain market. References http://www.investopedia.com/ask/answers/06/ipoadvantagedisadvantage.asp