Problem Solution: Lester ElectronicsInformation provided by scenario one and two shows that there are issues in the electronic industry. This industry is becoming more competitive as companies are looking to form mergers to expand in the market. This has brought a challenge to Lester Electronics to find new ways to keep one step ahead of the competition. Lester Electronics is about to possible lose a long standing contract with Shang-wa, due to the hostile bid from Transnational Electronics Corporation. Lester Electronics is now looking at different ways to cut their costs, advance and expansion opportunities in the international and domestic market. The company's leadership team has created a financial plan that will put Lester Electronics on the front line of the industry. The organization must ac quickly to prevent the company from losing any profits and maximizing shareholder wealth.
Situation AnalysisIssue and Opportunity IdentificationWith each issue comes opportunity for Lester Electronics that should only be brought about by sound business rationale and with the best interests of the shareholders in mind.
A further sensible reason for a merger is to combine complementary resources between Lester Electronics, and Shang-wa Electronics, however Transnational Electronics Corporation had moved to a hostile bid for Shang-wa Electronics. A successful merger can take place when synergies are realized meaning that the resulting company is greater than the sum of its previous business parts, which current and past financial data will need to be evaluated to ensure the merger would achieve economies of scale which result from the spreading of fixed cost across a larger output. Another reason Lester Electronics should merge with Shang-wa Electronics is to achieve economies of vertical integration which will give the assurance of distribution in the domestic and international market. Each of the companies' has different strengths, such as talent, processes, systems,