Problem Solution: Lester Electronics, Inc MBA 540 week 6

Essay by reporter1University, Master'sA, February 2009

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Problem Solution: Lester Electronics � PAGE \* Arabic �1�

Running head: PROBLEM SOLUTION: LESTER ELECTRONICS

Problem Solution: Lester Electronics

University of Phoenix

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Problem Solution: Lester Electronics

Introduction:

Lester Electronics, Inc., is a distribution company in the United States, and has a contract with Shang-wa Electronics, a Korean manufacturer of capacitors. Shang-wa has been in business since 1969, and has been a small successful business from the beginning. Under the contract, which must be renewed annually, Shang-wa granted, Lester the exclusive right to sell capacitors in the United States for 65 years, as long as Lester maintained a minimum annual purchase of $1 million wholesale; as result, Shang-wa is Lester's primary supplier of capacitors for the U.S. market. In exchange, Shang-wa cannot knowingly sell its capacitors to anyone intending to market to U.S. buyers. Lester added additional components to its product line. Shang-wa's capacitors are well known in the U.S.

market that is why Transnational Electronics Corporation, a large manufacturer and distributor of electronics components wants to acquire Shang-wa. On the other hand, Avral Electronics equipment and component parts manufacturer headquartered in Paris wants to acquire Lester, because they want to market their product in the U.S. market (UOP, 2007). This new acquisition could cost trouble between Lester and Shang-wa agreement and for morale.

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Situation Analysis

Issue and Opportunity Identification

Lester Electronics, Inc. is a distribution company in the United States, and they have a contract with Shang-wa Electronics, which is a Korean manufacturer of capacitors. Under this contract which is renewed annually, Shang-wa is Lester's primary supplier of capacitors for the U. S. market. Lester's revenues are approximately $500 million a year. The next issue is that Transnational Electronics is interested in a hostile take-over of Shang-wa, if this happens it would mean a large drop of...