Overview Kohler, Co Essay Example | Topics and Well Written Essays - 1000 words

Overview Kohler, Co - Essay Example At this point, it may be worthwhile mentioning the difference between a public company and a privately held corporation. The initial difference between the two is that a privately held company is owned by its founders or a group of private investors, but a public company is partially owned by its shareholders. From a financial standpoint, the difference between the two types of companies is that a public company can gain additional capital by selling stock to the public, but a private company does not have this option, so any capital that it needs will have to be obtained from private funding. This private funding can mean that capital for the privately held organizations will be more expensive. This initial extra cost could be a tax advantage to the private company. However, if money is needed quickly and cheaply a privately held company will find itself at a disadvantage. The manufacturer operates in a fairly competitive environment. It competes against other large corporations, su ch as American Standard, Masco and Cummings Engine. The biggest difference between Kohler and its competitors is the manner in which Kohler has chosen to diversify its operations. Kohler has diversified outside of the plumbing, engine and generator industry by investing in the furniture and luxury resort business. This type of diversification usually proves difficult for most organizations. For this reason, Kohler's competitors have managed to successfully diversify into similar or related industries. Kohler began as a family owned business and has, for the most part, retained that status today. Although the company generated approximately two million dollars in sales in the year 2000, it also remains a privately held corporation. The Kohler executive staff operates under the premise that as a privately held company, they are able to remain more competitive as less information about new products and services will not be re-produced as quickly by competitors. The fact that the organization has remained private allows for it to operate without the scrutiny that governmental regulations would create for its financial decisions or structure. Kohler's structure also consists of a charitable organization called Kohler Foundation. This foundation was created almost entirely with Kohler stock. Since Kohler Foundation is a charitable organization, by law, it is required to pledge a portion of its assets to other charitable causes. Based on Kohler's records, this charitable contribution am ounts to five percent a year (2005). The company's decision to remain private has worked to its advantage with regards to its stock price. Those few shares that have made it outside of the family circle have become so coveted that the price skyrocketed to an unrealistic range of one hundred to one hundred and thirty-five thousand dollars. This is a stock price that most public trading companies would never even dream about. However, for a company with a senior management team that wants to remain privately held and does not want to strike the interest of government officials, this is a problem that has to be addressed immediately. Not only does such stock prices cause unwanted attention to the company, but the company executives are afraid that such prices will cause the company to loose even a