Going Public Through an IPO

Going public through an IPO represents a strong growth opportunity for Kudler. The infusion of capital that an IPO would bring would allow the company to fulfill one or more of its key opportunities. These would include geographic expansion, expanding product line, expanding catering and bringing in outside management. In fact, the new shareholders would almost certainly demand that outside management be brought in to help. Going public could help improve the visibility of the company's brand name. It could also provide the opportunity to attract better managerial talent because the firm could offer equity-based compensation. Kathy Kudler could use the opportunity to move towards retirement as well.

Acquiring another company is the same industry would allow Kudler to expand geographically. They may also acquire new competencies that the other firm has. In addition, the acquired company might have a strong brand that can be leveraged. Lastly, expanding in this manner may help Kudler to achieve greater economies of scale. This could help them address one of the biggest competitive threats they face -- the emergence of a competing gourmet store that can undercut their prices. In addition, an acquisition would provide Kudler Fine Foods with access to different markets -- they could utilize different formats suited for different areas. For example, acquiring smaller stores could give them the means to make a market like Del Mar succeed, which is not possible given Kudler's current format.

Merging with another organization brings many of the same benefits as an acquisition would. However, a merger might bring Kathy Kudler the opportunity to phase out of the industry and towards her retirement or other opportunities. Moreover, a merger opportunity would be with a larger company than an acquisition, so the advantages such as economies of scale would be greater compared with making an acquisition.