Lester Electronics Alternative Benchmarking Week 2

Essay by witchy26University, Master'sA+, December 2008

download word file, 22 pages 0.0

Lester Electronics, a publicly traded electronics company founded in the 1920's, changed through family hands and was taken over by Bernard Jr. in the 1970's. With his proven business savvy and negotiating skills, Bernard Jr. has grown Lester Electronics, Inc. (LEI) from a company that was barley surviving to a $500 million per annum global electronics company.

In 1978, Lester Electronics and Shang-wa Electronics entered into an exclusive sales and supply agreement where Shang-wa would allow LEI sales rights to Shang-wa capacitors as long as the minimum sales numbers agreed too were met. This agreement has been kept for over 35 years and the contract is renewed annually. Lester has invited John Lin, founder and CEO of Shang-wa to sit on the board of LEI, Inc., which would take their thirty five year business relationship to the next level. In addition, John and Bernard have informally discussed partnering to establish new facilities in Asia which would increase sales and revenue and would also give John the opportunity to retire from the business if LEI were to willing to buy Shang-wa in the near future.

During an Electronics trade show in Bankok, David Antone, CEO of Transnational Electronics Corporation (TEC), approached John Lin of Shang-wa with an offer of acquiring the multi-million dollar corporation in the form of a hostile takeover considering John wants to retire from the company. This possible merger or acquisition stunts the growth of the LEI/Shang-wa agreement. There are other alternatives for LEI to consider, however, TEC stands to gain a great market share if they allow the merger of LEI and Shang-wa prior to the acquition. Mergers and acquisitions has be a positive, productive, and strategic move on the part of CEO's and Board Chairs to increase market share and incorporate a "united we stand, united...