Problem Solutions: Gene one

Problem Solutions: Gene one

Running head: SCENARIO ONE SOLUTION: GENE ONE CORPORATION

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 company’s 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 One’s 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