Lester Electronics
...540/MBA
Pamela Scales, Instructor
August 6, 2007
Problem Solution: Lester Electronics
Lester Electronics, Inc., is a distribution company in the United States and has business relationships with Shang-wa Electronics, a Korean manufacturer. Shang-wa has a contract with Lester to sell capacitors in the United States if Lester maintained a minimum annual purchase of $1 million per year resulting is Shang-wa being Lester's primary supplier. In exchange, Shang-wa cannot sell its capacitors to anyone intending to market in America. Lester added additional components to its product line. Shang-wa's capacitors are well known in the U.S. market that is why Transnational Electronics Corporation, a large manufacturer and distributor of electronics components wants to acquire Shang-wa. On the other hand, Avral Electronics equipment and component parts manufacturer headquartered in Paris wants to acquire Lester, because they want to market their product in the U.S. market.
Financial Planning
Financial planning consists of forecasting, budgeting and controls. Forecasting consists of short term and long term forecasting to ensure that the organization is prepared for the next week and the next decade. Short term planning needs to take into account the organization industry's outlook, customer base and what spending patterns will occur in the future, and other influences on expenses and income. Long term forecasting is usually more difficult to anticipate and can end up sounding vague, but through constant adjusting the organization should be able to stay on top of the changes as they occur.
A budget: A budget is actually made up of 3 budgets. The capital budget should outline expected spending for assets (both fixed and capital) necessary to run the business. The cash flow budget should be based on your forecasted cash flow to anticipate income and spend it...
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