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Organizational Leadership

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As a manufacturer of technology Kevin Semcken, Chairman and CEO of Able Planet Incorporated requires more capital than other types of businesses, for example a service business. According to Scarborough (2012), "Start-up companies often need capital to purchase equipment, buildings, technology, and other tangible assets as well as to hire and train employees, promote their products and services, and establish a presence in the market" (Scarborough, 2012). A step that Kevin Semcken, should have taken prior to approaching potential lenders and investors is turning to internal methods of financing. This would help Kevin Semcken to move away from dependency on financial institutions for capital. An example of an internal method of financing is retained earnings. The retained earnings should not be distributed as dividend, instead retained within the company. The shareholders denied the dividends will expect retained profits to be invested to achieve a competitive rate of return. Most businesses retain about half of their profits to finance growth. Another step that Kevin Semcken, should have taken prior to approaching potential lenders and investors is reducing his inventory. He should heed the advice of his two board members Rob Cascella and Steve Parker and put a hold on the production of the Sound Fit headphones prototypes. This would also keep inventory under control. The costs of purchasing and storing inventory utilizes revenue that could be used to develop the business. Another step that Kevin Semcken, should have taken prior to approaching potential lenders and investors is looking into the possibility of a character loan from another banking institution. In the case of Able Planet it is stated that the company has made all its payments to the bank on time for the last three years. For example, the

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