Gene One Problem Solution

Situation Analysis and Problem Statement

Genetic engineering involves the insertion of a segment of DNA containing one or more genes from one organism into a chromosome of another organism. Gene technology is used to help elevate levels of important nutrients to make crops more nutritious as well as to improve biological protection of crops against insects, weeds, and fungi. Genetic engineering revolutionized natural selection as well as Wall Street expectations. Gene One, a private company established in 1996 entered the biotech industry with groundbreaking gene technology to eradicate disease in tomatoes and potatoes, is no different.

Situation Background

Gene One (GO), once a two million dollar start up company, has grown to a $400 million company after the introduction of gene technology that eradicated disease in tomatoes and potatoes. GO CEO Don Ruiz has noticed a sharply rising stock index on Wall Street indicating interest in biotechnology. The board members believe GO will have to go public within the next three years in order to keep pace with both demand and to realize annual growth targets of forty-percent. Certain members of the team feel timing are crucial for success due to recent scandals on the human genome sequencing as well as the stringent Sarbanes-Oxley Act (SOA) and its requirements.

Under the SOA, Gene One needs to have an IPO board to go from a privately held company public. First, GO lacks the infrastructure to support an IPO board. The IPO board gives GO an initial evaluation of its internal controls over financial reporting and identifies its' readiness in areas that may require improvement. Secondly, Gene One needs IPO capital for developing, marketing, and advertising its new technology if it is going to remain successful. According to the executive meeting attended by Don Ruiz, public companies have more credibility than do private companies have and can gain required capital for growth of technologies, product and marketing. Third, management just does not seem ready to operate a public company and are unprepared to assume responsibility for its expectations. Preparing and processing IPO's take time and money, internal company support, and ongoing compliance with SOA in regards to financial statements that the company fails to properly have. Last, but not least, the underlying issue involves impressing Wall Street and adding value to their bottom line. Research and development of new Gene Technology is a slow, time-consuming process that entails careful analysis and study of both prospective and retrospective data. To develop two new technology breakthroughs and six innovative products in six months is highly improbable.

Opportunity Identification

While there are some issues concerning Gene One, there are opportunities as well. GO can become a publicly traded company over the projected thirty six month period if every member on the management team has a consistent vision of adopting a IPO board and going public. The funds that are generated in the IPO can be used as currency to acquire other companies, assets, and liquidities. They have the potential to hire outside consultants to help comply with the SOA. In addition, Gene One has developed one breakthrough technology. Companies with management teams that have products to market and have big partners to back them up have the best chances of winning the investors heart. Gene One has the potential to partner up with bigger companies to have money available to allocate elsewhere.

Stakeholder Perspectives/Ethical Dilemmas

While creating jobs in manufacturing is a plus, stakeholders must be taken into consideration. As the executive committee team put together their strategy, they were focused on meeting the growing expectations of Wall Street demand on agricultural biotechnology. They did this by implementing a forty-percent annual growth rate over thirty-six months, developing two new technology breakthroughs, and six new innovative products based on current technology. Here they were beginning to face a dilemma. Identifying how to do so without any reality check with key stakeholders is a risk. Angela Thomas resigned as she realized her job was not to please Wall Street but her passion revolved around pure R & D as Teri Robertson realized later.

Likewise, the community wants important level of nutrients in crops rather than low levels achieved through quick innovations. Some fear that crops tainted with certain proteins cause allergic reactions. On the other hand, farmers no longer need to taint crops with pesticides. The executive board members are committed to the core aspect of the business; pleasing Wall Street.

Problem Definition

Gene One and the management committee can find a way to go public and innovate new technology for the foreseeable future by making appropriate adjustments.

End-State Goals

In order for Gene One to go public and further improve cash flow, the company must look at and set realistic goals for the near future. A few of these goals may include: a) become a publicly traded company in three years b) retain Teri Robertson as an employee by allowing pure R & D c) establish a plan for SOA no later than April 2007 d) cultivate and market existing breakthrough technology in two years.

Going public presents a company with many challenges as well as opportunities. Financial challenges are always present. The first step for Gene One to think about is whether the time is rite for it to go public by reviewing its goals, its management, the numbers, and the business itself.

Alternative Solutions and analysis

In realizing these end state goals, GO can become a public entity without establishing an IPO. The company can look for investment banks (Venture Capital) looking to sponsor an IPO. When sponsored, GO can obtain financial strength. Once sponsored, GO can get money to expand the business and obtain market share. A venture capital can enhance GO business by assisting in areas where it needs expertise, in GO case, the legal issues surrounding SOA and SEC requirements. On the other hand, once the investment is made, GO must be prepared to lose part of the ownership. Don Ruiz can no longer manage the company as a family-run style business as he has over the last eight years. However, a VC will only make an investment if GO has management with great execution ability, a competitive product, and a good return on investment. Don Ruiz's management team does not have the ability to execute the current business plan of going public.

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