Virtual Organization Strategy Paper

Essay by chase06University, Bachelor'sA-, June 2009

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Huffman Trucking was established in 1936 and developed its business throughout the eastern United States. They have recently expressed a desire to expand the business and they are reviewing several options. This paper will provide a SWOT analysis on three expansion strategies including the release of initial public offerings, the acquisition of another firm, and a merger with another firm. Each strategy will offer advantages and disadvantages, by contrasting the strengths, weaknesses, opportunities, and threats of each of the three strategies, this paper will highlight why Huffman Trucking should choose to merge with another firm in order to expand its business.

Initial Public offering (IPO)An IPO occurs when a company releases stock to the public for the first time in the primary market. Those shares are then made available for trade in the secondary markets. Several advantages and disadvantages exist when a company releases an IPO (Keown, Martin, Petty, & Scott, 2005, p.

11). Huffman Trucking is privately held company till now. The SWOT analysis of going public through IPO is as follows:StrengthsThe offering of stocks to the public raises new capital for the company. The new capital can be used to invest in the business for future growth and the owners of the firm can easily convert their shares to cash. Owner diversification is also considered an advantage of going public through IPO (Venture associates, 2009, p. 1).

WeaknessesOne of the major weaknesses of going public is loss of the personal benefits for the owners of the firm. The initial cost of IPO is high and is ongoing. For about 15% to 25% of capital raised through IPO is spent on expenses related to the public offerings (Keown, Martin, Petty, & Scott, 2005, p. 413). After the firm has gone public, the firm is required to report periodically...