If Kudler Fine foods virtual organization goes public through the sale of IPO, there will be more cash to finance operations. This is because people will come and buy shares so that they can be stakeholders in company. The money contributed by shareholders may be used to expand operations, increase more branches, and invest in advertisements and research etcetera hence increasing the flow of income to the company.
There is also increased public awareness about the company if it goes public. This means that more people will know the business hence there is a higher chance that sales will get boosted through this awareness.
Weaknesses of the Approach
The strategy may be seen as an excuse by the owners of the company to exit. This may create negative publicity hence tainting the name of the Kudler Fine Foods.
With the company going public, there will be need for more disclosure. Information such as financial statements must be made public. This is a requirement by law so that the various stakeholders such as the shareholders may get access to information. This means that the level of confidentiality relating to the company will be less.
The company will be in a better position to finance its operations through the finance raised. There is also the opportunity of increased awareness about the company
There is a threat of competition due to disclosure. Information will leak to competitors about how the business is doing. This will give them an upper hand.
Some of the factors that contribute to exchange rate risks include the interest rates of a country, level of unemployment which affects the economy of a country greatly, economic growth expectations, central bank activities as well as a country’s balance of trade
Globalization affects financial decisions in that it allows companies to compete globally. The company can also attain new resources and attract new investors. This gives the company a chance to grow.
Mitagating against exchange rate risks
This may be done by dominating the deal and agreeing to be paid in USD and not any other currency. In case transaction is in any other currency, there should be sharing of risk of fluctuation. One may also buy insurance to cover the risk of exchange. Working through bank tools and instruments may also be helpful. Large banks often offer this.