Integrative Problems: Riordan Manufacturing

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370 Integrative Problems; Riordan Manufacturing Riordan Manufacturing is a global plastics manufacturer that employs over 500 people with projected annual earnings of $46 million. Riordan Industries, Riordan Manufacturing’s parent company is a Fortune 1000 enterprise with revenues in excess of $1 billion. The corporate headquarters is located in San Jose, California with additional manufacturing plants in Georgia, Michigan, and China. Products include plastic beverage containers, custom plastic parts, and plastic fan parts. Growth is the ultimate goal of any business and without growth success cannot be achieved. Growth in an organization can occur naturally but often has to be created and this paper will examine all…show more content…
Riordan Manufacturing is already a diverse company with experience in fields such as medical, household electrical (fans), and plastic bottles. Additional diversity would add competencies to their manufacturing base. Merging with or acquiring other businesses would address internal initiatives, such as the initiative regarding the development and sale of complementary medical devices and the extension of design and capability through collaborative co-design. Typical synergies of a merger or acquisition, such as economies of scales where the infrastructure cost and efficiencies of the facilities can be spread among more businesses, increased market power acquiring a larger portion of a given market, or tax benefits can be experienced by Riordan Manufacturing. A merger or acquisition would allow Riordan Manufacturing to depreciate assets gained from the transaction. Another synergy of a merger that would be an opportunity for Riordan Manufacturing is complimentary in financial slack. “When cash-rich bidders and cash-poor targets are combined, wealth may be created. This is particularly true where the cash-poor firm is a small business with limited access to capital markets” (Titman, Keown, & Martin, 2011, p.…show more content…
Riordan Manufacturing produces lifesaving medical equipment that is used to treat those with heart disease. A the world’s population continues to increase, the need for more of these life-saving devices has the potential to only improve the financial health of Riordan Manufacturing. The steady increase of the cost of fuel also has the potential to affect the cost of shipping for Riordan Manufacturing. Also, because most of Riordan Manufacturing is located in the United States, the strength of the dollar compared to other currency has the potential to affect financial decision made by Riordan Manufacturing. Conclusion References Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. ( 2010). Financial accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons. Titman, S., Keown, A. J., & Martin, J. D. (2011). Financial management: Principles and applications (11th ed.). Upper Saddle River, NJ: Pearson/Prentice

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