Project OverviewGentry Inc. is a mid-sized tech firm (200 employees and $300 million in revenue) and has been privately held since the firm’s inception ten years ago. The organization’s board of directors is keen on expanding the operations globally to take advantage of a growing market. Based on reports from the research and development team, the organization can increase its profitability metrics by 15 to 25% if it expands the operations to China, Japan, and Germany. Becoming a multinational organization will not be easy. To finance this expansion, the board of directors has decided to take the organization public and issue some bonds to raise an additional $50 million. The research team has already determined that the organization meets the financial requirements outlined by the Securities Exchange Commission. The goal is to maximize the Initial Public Offering (IPO), and the leadership must efficiently manage the capital, measure the risk of the investments, and ensure the financial metrics are robust relative to similarly sized organizations.Based on the information that you learned about the different types of risk, scenario, and sensitivity analysis, you will be identifying the risks that will be associated with the IPO and global expansion. Using your readings from this module:Provide your recommendation in an 800-word paper with APA formatting.Determine how each of the following risk exposures affects the international expansion of Gentry.transaction risktranslation riskeconomic riskInclude how you would use sensitivity and scenario analysis to make your recommendation. Spell out the advantages and disadvantages of each method.
jortiz_groupprjct_030319.docx
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Running Head: CLIENT ENGAGEMENT
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Jennifer Ortiz
3-3-2019
CLIENT ENGAGEMENT
Introduction (Expanding Gentry Inc)……………………………………………………3
History of the firm…………………………………………………………………………3
Growth strategies………………………………………………………………………….…4
Capital structure…………………………………………………………………………….5
Works cited………………………………………………………………………………..…6
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Introduction (Expanding Gentry Inc)
Gentry Inc. needs to expand both in the domestic and international market by raising funds
through the IPO (Initial Public Offering). The firm wants to venture into the markets in Germany,
China, and Japan which will increase its profit level from 15 to 25%. In expanding to the global
market, the firm Gentry Inc. will be in a position to capitalize on the glowing market and become
a global player. The board of director needs to enhance the operation to make the organization
become a global player. However, this will not come easy as there is a need for additional funds
to the tune of $50 million. This amount of money will be raised by making the company public
and selling of bonds. In the capacity of a consultant, I ensure that Gentry is successful in raising
the required funds through the effectiveness of IPO, recognizing the risks to the business and how
to deal with them, management of the borrowed capital and finally ensure that they maintain the
financial robust.
History the firm
Gentry Inc. is a technology firm that is mid-sized located in New York. The company has
200 employees and currently makes an annual revenue of $300 million. The company has been in
existence for over ten years and is privately owned. The company provides services that range
from construction management and general contracting services. It specializes in the construction
of custom residential projects. Also, the company does all things related to construction such
developing of property and installation of interior details. The customers are based mostly based
in New York and due to the size of the company the company usually give personalized services.
The firm is in the process of expanding the customer base to increase it profitability levels and
gain a lot from the growing markets.
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Growth strategies
Gentry Inc. wants to venture into the international markets and increase its operations at
the domestic level. The firm will successfully achieve growth by coming up with the right and
informed growth strategies. Growth strategies will revolve around increasing sales and profits. To
begin with, Gentry should consider market penetration as a growth strategy (Covin, Jeffrey, and
Kimberly, 2006). The firm needs to use the existing products and services to enter new and virgin
markets. The firm should consider increasing market share in new markets by lowering prices and
product differentiation. This strategy ensures that the firm gets access to the new and virgin
markets. Consequently, Gentry Inc. should consider market expansion as a growth strategy
(Covin, Jeffrey, and Kimberly, 2006). In this case, a company gains access to new markets as a
way of expanding. There are barriers to entry into new markets, but the firm finds a way where
product find their way into the market thereby increasing sales and profits. Furthermore, Gentry
should consider product and services diversification as a growth strategy (Kaplan, Robert, and
David, 2001). The firm needs to introduce new products as per the demand of the customers and
sell them in new markets. This strategy will attract customers and enable the firm to compete with
others. Lastly, Gentry can use acquisition as a growth strategy. The firm can acquire other
companies that offer similar services to expand their operations (Kaplan, Robert, and David, 2001).
In acquiring already existing companies, it becomes easy for the firm to market itself and its
product to the people in the new location. Gentry should consider all the growth strategies keeping
in mind that all the strategy require the fund to be successful.
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Capital structure
Capital structure entails the way a company uses an organization finances its activities,
growth, and operations by using funds from different sources. Gentry as a firm can get funds from
the sale of shares using the IPO, bonds, equity and retained earnings to finances its growth
strategies. In this case, the firm is keen on raising funds by going public and issuing of bonds to
raise over $50 million. Gentry goes public as they offer the members of the public to buy shares
with the help of an underwriting firm. The underwriting firm enables the small firm to identify the
type of security to offer and the offering price (Baker, Malcolm, and Jeffrey, 2002). This enables
the company to raise funds necessary for expansion. On the other hand, the firm can raise funds
for growth by issuing of bonds. In this regard, bond acts as a loan between the firm and the investor.
The investor undertakes to give a certain amount of money for a specified period (Baker, Malcolm,
and Jeffrey, 2002). The investor, in turn, gets interests at predetermined periods. Gentry will be
assured of enough capital to implement its growth strategies when the different ways of sourcing
for funds are successful.
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Work cited
Baker, M., & Wurgler, J. (2002). Market timing and capital structure. The journal of finance,
57(1), 1-32.
Covin, J. G., Green, K. M., & Slevin, D. P. (2006). Strategic process effects on the
entrepreneurial orientation–sales growth rate relationship. Entrepreneurship theory and
practice, 30(1), 57-81.
Kaplan, R. S., & Norton, D. P. (2001). The strategy-focused organization. Strategy and
Leadership, 29(3), 41-42.
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