Gene One Problem Solution

Running head: PROBLEM SOLUTION: GENEONE

Problem Solution: GeneOne

Terri P. Johnson

University of Phoenix

Problem Solution: GeneOne

GeneOne is a biotechnological company that has successfully increased its profits from $2 million to $400 million within eight years. The company needs to expand its operation to meet the demands and realize its annual growth targets of 40 percent. GeneOne plans to become a public initial offering (IPO) public entity. The profits from marketed stocks will be used to increase annual growth, and fund research new technologies and products. Becoming an initial public offering entity is a risky investment. No one at Gene One has experience or knowledge to implement the IPO process. Another issue to address is where the company will prove to Wall Street that it has the leadership and organizational capabilities to sustain its market shares. GeneOne's research has become stagnant and very interdependent on one person, Teri Roberts, to develop all new technology and products. GeneOne will have to address these problems to successfully become one of the top industrial companies in the biotechnology field.

Situation Analysis

Issue and Opportunity Identification

GeneOne entered the biotechnology field in 1996, and has grown into a $400 million company in eight years. Wall Street stock investors have shown a growing interest in biotechnology, especially with new leadership at the Food and Drug Administration. GeneOne CEO and Board members believe to keep up with demand and realize annual growth targets of 40 percent, the company will have to become a public entity.

GeneOne's founder and CEO, Don Ruiz, has a visionary goal is to sell stock publicly through the initial public offering (IPO) to obtain needed capital. The capital will be re-invested in research and development in new technology and products within a three-year period. A clear strategic plan has been devised by the CEO and his Board members, along with the help of key members in the investment community. GeneOne implementation of its strategic plans will establish the company as a strong competitor, and prove its leadership and organizational capabilities are strong and competent enough to secure that the company will become a candidate of Wall Street's strict scrutinizing.

GeneOne's becoming a public entity is an opportunity for expansion and a competitive advantage in the biotechnological industry. There are issues that need to be addressed to successfully implement the company's goals. No one at GeneOne has any knowledge or experience with IPOs. To become a public entity, GeneOne must comply with specific rules and regulations of the federal government (SEC) and Wall Street. Both are outside stakeholders that must be satisfied of GeneOne's capabilities to become an initial public offering entity.

Stakeholder Perspectives/Ethical Dilemmas

GeneOne

GeneOne is a biotechnical company that is interested in increasing its revenues and profit. The founder and CEO, Don Ruiz, has constructed a strategic plan with the advice of his Board members. The company will sell its stock publicly by becoming an initial public offering (IPO) entity. The IPOs will be used to meet the company's realized annual growth rate increase of 40 percent and fund its research and development. The company has a higher potential of risk since no Board member, the CEO or upper management have any experience or knowledge about IPOs. However, if the goals are successful, the company will receive high profits and funding for its projects.

Shareholders

GeneOne's shareholders are the ultimate owners of the firm and they alone have the privilege of receiving residual claim to income, whether paid out in dividends or re-invested in the company (Block-Hirt, 2004, par. 506). According to Block and Hirt (2004), "All income that is not paid out to creditors or preferred stockholders automatically belongs to common stockholders" (p. 506). The shareholders also have the privilege of voting and can use cumulative voting to give minority stockholders representation on the board (Block-Hirt, 2004, par. 521).

Gene One's stockholders have the first option to purchase new shares through a procedure known as a "rights offering" (Block-Hirt, 2004, p. 522). Rights offering is when a shareholder receives one right for each share of stock owned and may combine a certain a number of rights, plus cash, to purchase a new share (Block-Hirt, 2004, par. 522). The stockholders also have the advantage of purchasing the stock below the current market price.

Employees

GeneOne's employees have a stack in the company and should be informed about the company's new mission and goals. The employees should be informed by Don Ruiz, the CEO of GeneOne, of his visionary goals and the strategic planning that has been set in motion. The employees are valuable resources that the company cannot spare to lose any of its skilled and knowledgeable staff during its expansion and marketing of new technology and products.

Problem Statement

GeneOne is a biotechnological company that has successfully entered the field as a contender. The company has $400 million dollars and wants to expand. GeneOne's problem is how to maximize their profits.

End-State Vision

GeneOne has successfully completed the company's strategic goals. Wall Street was impressed with the company's organizational and leadership capabilities and allowed the company to become a public entity. The initial public offering (IPO) was a larger success than anticipated. The stock started at $40.00 a share and before Wall Street closed had double its market share to $80.00 a share. More importantly, the stocks sold like hot cakes. Wall Street had potential investors interested in the stock.

Citibank Inc. brought 30 percent of GeneOne's marketed shares. The majority of the stock was sold to either institutions or large corporations. No small business or individual investors got the opportunity to invest because the shares were brought within the first few hours of its debut ate as a public entity. This was an excellent price and the institutional investors and corporations