Lester Electronics Problem Solution

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Problem Solution: Lester Electronics Identifying a potential solution for the Lester Electronics (LEI)/Shang-wa merger is the primary purpose of this problem solution paper. The optimal solution would be for LEI to look to other companies in the electronics manufacturing and distribution industry who may have merged recently or in the past as a model for the course the LEI/Shang-wa merger should take. If no reasonable examples to follow exist in the electronics manufacturing and distribution industry, then LEI should look outside of the industry to other companies that may employ similar financial approaches for reference. A merger between LEI and Shang-wa will not only allow the two companies to maintain the business relationship enjoyed between the two owners, Bernard Lester and John Lin for over 35 years, but would also allow both companies to achieve the next stage of success their businesses, which for John Lin would be stepping down into retirement while at the same time allowing his company to continue to flourish in the hands of a trusted business partner; and for Bernard Lester the opportunity to expand his business globally without losing the exclusive position of leadership in distribution in the United States. Situation Analysis Issue and Opportunity Identification Shang-wa is currently facing a potential hostile takeover by Transnational Electronics Corporation (TEC). TEC’s takeover of Shang-wa represents a potential reduction in revenues for LEI to the tune of 43% over the course of five years. In addition to this, LEI was also presented with an offer to be acquired by Avral Electronics, a European company who is interested in developing a distributorship business in the United States. With other opportunities for change already on the horizon for LEI and Shang-wa, merging the two companies together will present several issues and opportunities for

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