Lester Electronics Essay

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Lester Electronics Gap Analysis Paper Tracy Lynn Spiers University of Phoenix MBA/540 December 1, 2008 Dr. David Harrell Gap Analysis: Lester Electronics The Lester Electronics scenario outlines two electronic companies that are experiencing issues of merging, joint ventures, acquisitions, partnership and financing. The following literature presents Bernard Lester, CEO and founder of Lester Electronics and John Lin, founder and CEO of Shang-wa Electronics. The Board of Directors for Lester Electronics has made the decision to allow a merger with Shang-wa. In order to complete the merger, the board of directors must consider assessing financing need for wealth maximization. Furthermore, integrating the culture between Lester Electronics and Shang-wa Electronics will be a delicate technique. In creating a dynamic mix, the joint venture can increase productivity and profitability. These facts set the stage then for the following analysis. Merger’s, acquisitions, partnerships, and various combinations of company takeovers occur daily in today’s business arena. Lester Electronics Incorporated (LEI) stands a crucial crossroad. The company faces a takeover from a larger competitor or the potential merger with a long-standing business partner Shang-wa. The board of directors at LEI stands has directed management to pursue a merger with Shang-wa. The pro forma suggests the newly consolidated companies will be in financial distress. Situation Analysis Issue and Opportunity Identification The board of directors LEI sent a letter to management stating a merger with Shang-wa will bring success to the firm and analysis of possible alternative financing options can move forward. Lester can consider several financing options to fund a merger. LEI must decide on methods to finance the merger such as debt. “A merger refers to the absorption of one firm

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