Workbrain Corp Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Work brain Corp Case Study Solution

Need to raise money:

It can be said that Workbrain needs to raise money, although there are good amounts of financial resources available to the Workbrain but availability of financial resources doesn’t mean that the company doesn’t require any money in order to expand the operations and sales. Finance is said to be the backbone of every organization, without adequate financial resources it is highly likely that the company will not survive. Furthermore, the financial resources which are available to the management of Workbrain is not sufficient for fulfilling the expansion needs of the management. They have enough resources to fulfill the day to day and working capital requirements.

On the other hand, it is very important for the organization to have appropriate levels of financial resources because some opportunities can only be exploited if the company have enough financial resources, there is no time available to raise money in these cases and the company have to take immediate actions. If the finance is not available in the form of cash or cash equivalent, Workbrain cannot take benefit from these advantages.

Workbrain Corp Harvard Case Solution & Analysis

Lastly, for the sake of acquiring new customers, it is very critical to have huge levels of finance available, many of the large multinational and multibillion organizations only associate with the companies who are key player in the industry. In addition, for becoming the leader, it is necessary to have adequate amount of finance available to them. Furthermore, it doesn’t only allow Workbrain to improve their reputation, it will also allow Workbrain to enhance the competencies associated with the organization. The most competent personnel wishes to associate with a company which possesses high financial resources because it will provide job security and it will also increase the motivation of the employees as well.

Financing alternatives available to Workbrain:

There can be many financing options available to Workbrain, the main financing alternatives includes equity issue, obtain finance from venture capitalist or to obtain debt from bank or other financial institutions and the best options is to use retained reserves. All the financing arrangements have their own merits and demerits. Workbrain can raise finance from equity issue, it can be said that the management can obtain huge amount of finance from the equity issue because of the fact that general public lends money to the organization which are listed on the stock exchange. However, there are chances that the control of current shareholders will be diluted and they cannot derive the future strategy of Workbrain.

The second alternative available to the management is to raise finance through venture capitalists, the management have taken the loan from venture capitalist in the past and it is very much possible that they can get easily from the VCs. Furthermore, the transactions costs can be very low and return of these venture capitalist will also be low as they are eager to invest in the Workbrain because of excellent anticipated performance. However, the VCs might also place their representatives in the board of directors which might bring conflicts between the goal of current shareholders and potential new shareholders.

Another financing alternative available to the management of Workbrain is to raise finance from the issuance of bonds and to obtain simple loan from bank or any other financial institutions. This financing arrangement is the cheapest method of raising finance because the risk of debt provider is very low due to the security, which the borrower gives to the lender. Furthermore, the transaction cost is also very low and the control of Mr. David Ossip VCs will not be lost as the debt providers don’t participate in the strategy development of the business. However, there is a possibility that certain covenants will be placed by the lender if the leverage ratio will reach to a significant level.

The last option available to Workbrain is to use retained reserves, the company can avoid significant interest payments if they use their own retained reserves rather than to use finance from other parties. Furthermore, the transaction can also be totally avoided if retained earnings could be used in the expansion of the business. However, there is not sufficient level of retained earnings available to Workbrain which can fulfill all of their requirements for the expansion.

Whether Workbrain should prepare for an IPO:

It is very important that the company prepare for a potential IPO in advance, usually it will require a lot of time and devotion of management to make an IPO successful. Even if Workbrain decides not to get listed on the stock exchange but they will have to be prepare for an IPO as it will help them in the future..............

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