Yahoo (version 2)
Throughout Lester Electronics’ (LEI) history, a key component of their growth has been the exclusive distribution contract they have with Shang-Wa. This is now being threatened by the hostile takeover approach by Transnational Electronics (TEC). The case shows that the loss of the exclusive contract would affect LEI’s revenue by 43% over five years, a significant loss for any organization. To prevent this from happening, LEI must take action in case of the potential loss of the exclusivity agreement.
Yahoo is an internet search engine company that has broaden its portfolio in recent years by acquiring numerous companies with the intent of “brining in additional tech know-how, targeted audiences, and features that will engage users longer” (Holohan, 2006, p.1). It is one of the original companies to generate the internet boom, and the low level of investment compared to rise in sales (acquisitions of less than $30million dollars with sales greater than $1.6billion per quarter (Yahoo, 2008)) has been particularly significant.
The diversifying of Yahoo’s product line, although significant to the organization’s growth, comes with growing pains. Lack of experience in the technological capacity of acquired firms has forced Yahoo’s hand to rely heavily on the existing knowledge of each company. Although Yahoo would like to use in-house staff that has a high interest in the acquired company’s future, they often have to use acquired staff, which will lose some of the technological leaders during the acquisition period. This often makes for a rough transitional period as each company has to buy into Yahoo’s culture while losing their own present identity.
LEI’s heavy reliance on the capacitor contract with Shang-Wa puts them ...