Riordan Strategies to Succeed Riordan Manufacturing Inc. is a leader in the field of plastic injection molding (Riordan, 2004). The company has facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China. Riordan's major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers (2004). Riordan Manufacturing Inc. is a privately held organization that wants to expand its operations. The company has three options that they are considering to do in order to expand the company. The options consist of going public through an IPO, acquiring another company in the same industry and merging with another company.
When considering whether going public is advantageous and will maximize shareholder wealth the first step is to determine the risk return trade off. Additionally, two major factors not considered by the goal of profit maximization are uncertainty and timing. Keown (2005) states, "financial managers spend a significant portion of their time planning for a firm's uncertain future." When looking at whether an IPO would be advantageous or feasible a determination as to if this would adequately meet investors’ expectations of ROI; in so doing we would need to determine what types of strengths, weaknesses, opportunities and threats exist. For example: the prevailing economic conditions, market trends would need to be positive. Additionally, Riordan would need to remain sensitive to their products and competition.
Preparatory measures involve the need for financial planners to collect sales forecasts from marketing personnel and production plans from operations, and then combining them to make projections of the firm's future financing requirements and growth prospects (Keown, 2005). With these tools in place the process of determining the