TFC, in its quest for expansion, it is obligated to meet or try to meetthe high expectation of the shareholders as it is a publicly tradingcompany. The company should ensure it incorporates experts informulating strategies and policies that would enhance confidence ofthe stakeholders. They would assist in the formulation of thefinancial and operating plan.
Thecompany should evaluate and consider both the high returns that mayarise as well as the risks. Since the project has increased the debtlevel of the company thereby increasing the debt expense, the companyshould set up strategies that would reduce other operating expenseswhile increasing revenues from the currently ongoing operations. Itwould ensure the company is still running profitably during the newproject period and supplement the earnings expected by shareholdersduring the lag phase period. Market research should also be wellconducted in the West Coast market as it would ensure the company seteffective policies.
Agencyconflicts will have an impact on the intended project. Stakeholderensure and try to safeguard their interests from any risk that isanticipated as a result creating agency conflicts. Creditors wish forreduced risk through well-calculated plan and strategy beforecommencing to protect their funds given as debt to the company. Theshareholders require high returns and expansion, to them, means moredividends and returns. Managers would have massive pressure toperform and record high returns despite the lag time the companywould require breaking even and commence profit generation. It mayresult in misrepresentation of facts by the managers so as to avoidstakeholder’s complaints (Ehrhardt, 2013). The company should,therefore, offer and convince the stakeholders how the risk would nothave adverse effects on the company.
Sharingthe same vision and are dependable having a Board of Directors whohave a similar vision would enhance growth of the business from acampus level firm to an IPO. Dependability comes with the ultimategoal of leaving the firm later to pursue photography. They areexpected to run the business to profitable and higher goals even inyour absence. With a shared vision, they would enhance growth,sustainability and gong concern attribute to the company. Effectivecorporate governance would be achieved easily as the Board ofDirectors could make effective and efficient decisions that would notadversely affect the company’s operations.
Understandsthe market and industry the electronics and software industry ishighly dynamic due to consumer preference changes. Funds are requiredfor research and development of new designs and tailor-made devices[ CITATION Eug13 l 1033 ].The industry has strong competitors who have large economies of scaleas well as potential to obtain highly skilled personnel for theirwork. The Board of Directors is expected to create appeal forinvestors to offer the funds required. They should be knowledgeablein the field as they would create high-profit margins that would beattractive to potential investors when they opt to go public.
Ehrhardt, E. B. (2013). Financial Management: Theory and Practice. Mason, USA: Cengage Learning.