Lester Electronics Wk4 Gap Analysis
...Gap Analysis: Lester Electronics
Lester Electronics (LEI) is at a turning point of the business. Bernard Lester must change the way he manages the business due to the changes in the industry and the potential loss of their best vendor. John Lin, CEO of Shang-wa (SWE), is looking to retire and spend more time with his family. John has suggested to Bernard that they partner in a new venture that would allow both companies to realize growth for their products. John is also weighting the merit of selling to another manufacturer, Transnational Electronics Corporation (TEC). Without entering into a joint venture with Lester, Shang-wa will struggle to remain in business since John Lin has not prepared a successor. LEI is also feeling the pressure from Avral Electronics, S.A. to sell the business. LEI must decide whether to collaborate with Shang-wa to avoid being forced out of market or accept being acquired by Avral. LEI’s proposed joint venture with Shang-wa may be the only option that allows both companies a way to stay successful.
The Board of Directors has approved the merger and LEI’s financial team must come up with a plan for the venture to succeed. The merger will create new opportunities in the world market, allowing Lester to expand its borders into new markets. LEI will need to formulate a solid financial plan that optimizes growth opportunities while maximizing shareholder’s wealth.
Situation Analysis
Issue and Opportunity Identification
A main issue involved in the merger discussion for Lester is that Transnational Electronics Corporation (TEC) has approached Shang-wa with a hostile takeover bid. If Shang-Wa is acquired by TEC, LEI will lose a contract with its main supplier, resulting in a loss of 43% of their revenue over the next five years.
LEI needs to determine if they have the financial capacity to successfully complete a merger with...
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