Gene One Problem Solution
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Problem Solutions: Gene One Corporation
University of Phoenix
Transformational Leadership (MBA 520)
Problem Solution: Gene One
Gene One is emerging into a dominant force in the biotech industry and is looking forward to achieving extensive market growth. The Chief Executive Officer [CEO] and the Board of Directors feel an Initial Public Offering [IPO] is necessary to raise the capital required to attain this goal. This paper will use the nine steps of the Problem Based Learning module to discuss the issues and opportunities as well as raise the risks and alternatives available to the company in scenario one. First, we will look at the situation background.
Situation Background
Gene One is a biotech company specializing in groundbreaking gene technology used primarily to eradicate diseases in tomatoes and potatoes (University of Phoenix 2006). They grew from a small five-person team and a $2 million dollar investment, into a $400 million dollar company in just eight short years. The CEO and his Board of Directors have decided that in order to continue the companys upward growth and to reach their conservative growth targets they need to go public within the next three years. Gene One is a very young company and the current members have no experience in an initial public offering. The inexperience of the current leadership and the apprehension of the employees make for a volatile situation.
Issue Identification
Gene One employees are undecided over the decision to pursue an IPO. Many of the employees have grown to love the atmosphere of the small start up company and feel a public company will force them to make breakthroughs to meet the demands of shareholders. The company has a strong desire to be beneficial to society but chasing the Wall Street dollar could compromise their desires.
Some of the employees, as well as the Chief Technology Officer, have already voiced concern over losing the small company feel for the large corporate identity. The company must be careful not to upset the current culture, which they have worked so hard to attain. The current culture of the company is what has helped them keep their employees but it will have to evolve in order to face this new challenge.
Gene One has seen major growth under the direction of its starting five members but none of the members has experience in the area of a public offering. The Chief Financial Officer has earned a credible reputation with the Food and Drug Administration and the government, but has voiced concerns about the requirements of the Sarbanes-Oxley Act (SOA) and with disclosing financial statements to the Securities and Exchange Commission (SEC). These requirements will be new to the company and may be difficult to achieve in such a short period. The SOA act also requires an alteration of the board members to ensure an adequate mix of individuals experienced in finance and accounting. The process of finding new board members and realigning the board could take well over a year.
Opportunity Identification
The proposed IPO will give the company adequate funding and resources that the Board of Directors feels is necessary for growth. Gene One could benefit immensely from an increase in their current capital, which will give the company the resources necessary to purchase more lab space, and more advanced equipment. In addition, there is an opportunity to hire experienced employees with the lure of work at a large, state-of-the-art facility. An IPO would create jobs, which could boost the biotech industry, further emphasizing Gene Ones growth potential.
Gene One is a leader in the biotech industry and they have the ability to capitalize on this image with an IPO. The Chief Technology Officer recently received a prestigious award and currently holds numerous patents in the biotech field. These things are exactly what investors look for in an IPO.
The culture of the company has always been to contribute to society. Gene One now has the potential to reach more people through increased resources and capital. At first glance, it seems like a win-win situation for the Board and employees but this decision does not come without some dilemmas.
Stakeholder Perspectives/Ethical Dilemmas
There are several stakeholders involved with this IPO including future stakeholders. The founding members of Gene One started the company to contribute to society. They have made significant achievements in the biotech field but now feel pressured to make decisions based on making money, not scientific breakthroughs. Some of the starting five members have capital tied up in the company and may be unwilling to accept the risk involved with an IPO.
There are several employees at Gene One desiring to work for a company with a focus on science versus profit. A public company will be more concerned with churning out products to appease shareholders instead of making products that are beneficial to society. The CEO has already made it clear that agreeing with the IPO is necessary for the employees to keep their jobs. This ultimatum may have moral implications for those that are pure scientists and those that are interested in research, not products.
The Board of Directors has the desire to go public to ensure the growth of the company and to reach previously stated goals. They are more willing to accept the risk of going public due to their desire for increased income. An IPO will also introduce shareholders to the equation. Shareholders, like Board members, will have the same desire to make money, which will put additional strain on the employees to invent breakthroughs and new products.
Problem Definition
Gene One will raise capital and develop new products within three years, by creating an opportunity for financial and corporate growth. Gene One will realize annual targets of 40 percent by showing investors and Wall Street that they have the leadership and organizational capabilities to succeed as a public entity.
End-State Goals
Gene One will realign within 36 months to meet the requirements of a publicly traded company. Within the next five years they will be publicly traded and on course to meet growth and product development goals. Gene One estimates 40% growth each year for the first three years then furthering that expectation to 50% by the fifth year. The development of six new and innovative products in the first year