Transformational Leadership for the Gene One IPO
It is crucial for Gene One to continue to make collaborate decisions and empower all levels of management. The existing executive management team already has an information-sharing relationship. Expanding that to investors will increase branding and ensure strong public acceptance. This will prepare Gene One for the IPO. Each member of the management team has individual strengths to bring to the table. Utilizing technological knowledge, community and political support, solid reputation and proven growth will solidify the need to become a publicly traded company and received the benefits that come with that status.
In 2005 McDonalds spun off Chipotle, a pioneer in what’s called “fast casual” dining. The food is prepared fresh and the emphasis is on quality. As a result, Chipotle planned and IPO. Upon completion of the IPO, McDonald’s will hold a 69% stake and control 88% of the voting power. McDonald’s plans to sell or distribute to its shareholders all or a portion of its shares in Chipotle, but no action will be taken prior to the expiration of the 180-day lock-up period that bars current shareholders from disposing of their shares.
( Reeves 2005)
Like Gene One, Chipotle seeks to act upon the recent growth and increased profits. Of Chipotle’s 489 stores open on Dec. 31, 2005, 184 had opened since Jan. 1, 2004, and rapid expansion is planned in the next three years. This could make future results uneven, and a change in the economy or consumer needs could affect earnings. But more than that, In contrast to Gene One, Chipotle doesn’t have an extensive operating history as an independent company, making it difficult to evaluate its future prospects. Gene One has solid relationships and a solid growth history.
The origins of BTG date back to the late 1940s in Great Britain when the NRDC was created to commercialize innovation resulting from publicly funded research. Over the years, many important innovations were successfully commercialized, notably the Cepholosporin antibiotics, which still enjoy significant market share, magnetic resonance imaging and interferon.
The BTG brand was created following the merger with the National Enterprise Board, and the company prepared itself for privatization, which happened in 1992. Three years later BTG floated on the London Stock Exchange. In the following years BTG set about building its pipeline and notable events included the demerger of Torotrak, the creation of Provensis to develop Varisolve, and the launch of two very important products, Benefix, a treatment for bleeding disorder Hamemophilia B, and Compath, a treatment for chronic lymphocyte leukemia. This has been followed recently with the launch of Combunox, a painkiller, by Forest Laboratories, Inc.
In May 2005, BTG announced that, in the future, It would intensify its focus on developing and commercializing medical innovations going forward, principally in the fields of aging, neuroscience, oncology and Drug Repositioning.
BTG’s professional staff consists of people with 3 main types of education and experience. BTG have patent attorneys, transactional lawyers and business people with experience in high-tech industries, mainly pharmaceuticals and electronics. Instead of combing government-funded research center throughout Great Britain, BTG span the globe in search of valuable IP currently lying dormant in corporate and University patent portfolios. BTG is currently working with inventors in ore than 30 countries. BTG’s management team objective is to identify IP or unpatented inventions with commercial value and unlock that value by licensing it worldwide or by forming various kinds of ventures.
BTG has divided their people into sourcing teams. These teams are from Europe and North America. The attend all the top trade shows. The send letters and target centers of research excellent, meet the right people and tell the history of BTG.
Abbott Laboratories has languished for some time, along with most of the rest of the drug industry. Over the past three years, in fact Abbott shares have gained sixteen percent, one-third as much as the S&P 500.
Abbott’s prospects are getting brighter, thanks to new products and the company’s expansion into a new area of cardiovascular care that could alternately be a multibillion dollar business.
Abbott has long been regarded as one of the old reliables in the drug industry. More than sixty percent of the company’s business comes from pharmaceuticals.
Abbott’s management team should include a set of marketing principles, which help company managers identify, create, promote and implement the brands for their products by keeping in mind the consumer’s behavior and the market trends. Abbott’s management team can decentralize a strong focus on sub-brands where the corporate brand remains in the background.
One of the main challenges for brand managers is to market the brands competitively and to protect them from being misused by competitors. With the ever expanding internet environment, multiplying international transactions and increasing numbers of global travelers, the opportunities available to businesses like BTG and Abbott to position their brands, as per the jurisdiction, climate conditions, customs, consumers, and political environment, are immense and almost limitless.
As consumers, we all agree that comparative advertising is in vogue and is here to stay. It allows the market to stay competitive and helps consumers to decide between two products or services. In today’s global village, comparative advertising acts as a medium through which consumers receive useful and critical information about respective products and services (Dhokad, Mittal, 2005). Those in charge of marketing strategies within company are under a duty of caution when deciding to comfort their competitors.
Very similar to Gene One’s growth, Ingram Micro became an IPO company in 1996 in response to the external environment which demanded a 30% to 40% growth. The fragile organizational culture at the time lacked transformational leadership and acted leisurely to potential growth. There were several competitors that were making up tremendous grounds in the wholesale industry of Ingram Micro by providing IT services at a fractional cost. In addition, Ingram Micro’s warehouses lacked the technology and the machinery to distribute IT goods and services at a high volume and low cost to meet customer demands.
Very similar to Gene One reaction to go public, Ingram Micro’s decision to become a public entity alarmed several top executives which led to their resignations. For instance, “On May 22, 1996, Chip Lacy abruptly resigned as chief executive of Ingram Micro Inc. Lacy was the driving force in creating the $8.6 billion dollar distributor, the largest in the industry. His departure came on the eve of the company’s initial public stock offering” (O Heir, 1996). There were associate concerns about this business venture and the departure of key executive members. The company became unstable and numerous key associates were considering moving to the competitor and supply chain for job security.
Ingram Micro responded very positively to these changes by revising policies and procedures to include the IPO expectations. All associates were trained on these modifications. There were regular town hall meetings to communicate the benefits of an IPO company. Some of the benefits that were discussed were stock options, new job positions, and the promotional opportunities into higher paid positions. They were able to purchase new machinery and RF systems to be very efficient and produce goods and services at a reduced cost. Ingram Micro tripled their current Sales and established a strong global presence in the international market. Currently, “Ingram Micro Inc. is the world’s largest technology distributor and a leading technology sales, marketing, and logistics company” (Ingram Micro, 2006).
Most importantly, the acquisition of Jerre Stead, a former CEO of FedEx Incorporation, took the position of Chip Lacy. He used transformational leadership techniques to educate the Ingram Micro leadership team on the IPO transformation process and strengthened the organizational culture. “Mr. Stead is known for his visionary leadership, global expertise and proven track record of success. When he took Ingram Micro public in 1996, it was the largest technology IPO in history. Under Mr. Stead’s four-year leadership, Ingram Micro’s revenues grew from $8 billion to $30 billion” (The Entrepreneurship Institute, 1999). Ingram Micro has experienced a 30% growth each year, for over 7 years. Currently, Ingram Micro provides IT goods and services for over a 100 countries and is the only global IT distributor with operations in Asia. They service approximately 165,000 resellers and 1,400 suppliers (Ingram Micro, 2006).
The biotechnology industry is both competitive and ever-changing. Consumers are demanding chemical free homegrown products. It is easy for consumers to find other companies who can provide comparable services. However, new technology is only a fraction of what makes Gene One stand out over their competitors. Consumer loyalty and strong leadership will give them a major advantage. The challenge for Gene One will be to maintain their cohesiveness as a management team and maintaining a high level of social responsibility while expanding the company to a publicly traded organization. Management will have to focus on their social responsibility by continuing to have strong control over product development and new technology. As leaders, it will be crucial to maintain a level of adaptability as the workplace culture changes as a result of the IPO. In contrast to Disney, Michael Eisner’s reputation for obsessive meddling in the affairs of his managers has had a negative impact on the management team at Disney. Roy Disney was a hands-on manager who empowered his team. Gene One has a cohesive and passionate management team. (Mitchell 2006)
To McDonalds, “Social Responsibility represents the evolution of McDonald’s and the way we have adapted our business practices to meet the needs of the ever-changing world, understanding that while we are a local restaurant, our position as a global brand brings with it significant responsibilities”. (Love 1986) A public offering means that Gene One will also have to recognize the level of responsibility to the public which includes continuing to provide safe, environmentally friendly biotechnical products.
Overall, according to (Myers 2000), “When your company needs additional capital, “going public” may be the right choice, but you should weigh your options carefully. Gene One is in the early stages of development; therefore, it may be better to seek loans from financial institutions. Other alternatives include raising money by selling securities in transactions that are exempt from the registration process. There are benefits and new obligations that come from raising capital through a public offering registered with the SEC. While the benefits are attractive, Gene One will have to ensure they are prepared to assume new obligations:
• Access to capital will increase, since you can contact more potential investors.
• Gene One may become more widely known.
• The company may obtain financing more easily in the future if investor interest in your company grows enough to sustain a secondary trading market in your securities.
• Controlling shareholders, such as the company’s officers or directors, may have a ready market for their shares, which means that they can more easily sell their interests at retirement, for diversification, or for some other reason.
• Gene One may be able to attract and retain more highly qualified personnel if it can offer stock options, bonuses, or other incentives with a known market value.
• Gene One must continue to keep shareholders informed about the company’s business operations, financial condition, and management, incurring additional costs and new legal obligations.
• Gene One will be liable if you do not fulfill these new legal obligations.
• Gene One may lose some flexibility in managing the company’s affairs, particularly when shareholders must approve the actions.
• The IPO will take time and money to accomplish.
In conclusion, Gene One was compared to six companies. The companies selected were Ingram Micro, Tech Data, BTG, and Abbott. Some of the key course concepts identified is leadership styles, generic benchmarking, social responsibility, organizational structure and design. By completing the synopses of these six companies we have been able to identify and respond to the issues outlined in the Gene One scenario.
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