Lester Electronics Essay

395 WordsMay 12, 20092 Pages
Bernard Lester is the founder of Lester Electronics Inc. (LEI). The LEI is the distributor of capacitors which are manufacture by Shang-Wa electronics, a Korean company. As an electronic parts master distributor LEI market its products to small and medium sized original equipment manufacturers, small distributors throughout America and Europe. Operating in this mode, the company’s revenue approximates $500 million a year. In 1984, Bernard took his company to public. Shang-Wa is a well respected Korean company that produces capacitors. Shang-Wa granted LEI exclusive rights to sell Shang-Wa capacitors in US, as long as LEI maintain a minimum purchase of $1 million wholesale. In return Shang-Wa can’t engage in business with anyone who intends to sell in US markets. Situation Analysis Issue and Opportunity Identification Any corporation’s important goal is to maximize the wealth of the shareholders and thereby maximize the corporation’s wealth. For this reason each firm needs to engage financial managers. Financial managers should take decisions that increase the value of the share, and to increase the market value of the equity. Indeed, the maximization of the wealth of the firm and shareholders is the main concern when executives take decisions. Transnational Electronics (TEC) is a large manufacturer and distributor of electronic components is on the rise. With mergers and acquisitions, the company developed enough resources to expand globally. TEC recognized Shang-Wa’s capacitors demand and offered an acquisition. If this acquisition happens, the contract between LEI and Shang-Wa may not be renewed. In such a case, LEI may lose 43% of its revenue over next five years. Bernard obviously is concerned about the situation. John Lin the CEO of Shang-Wa is thinking about his retirement and looking for a good successor. He recently,

More about Lester Electronics Essay

Open Document