Financing Solution
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Phoenix University
MBA/540
Dr. John Denigris
June 28, 2007
Financing Solution
Workshop 6
Situation
Lester Electronics is a consumer and industrial electronics parts master distributor. Lester was founded by Bernard Lester back in 1978 after entering into an exclusive distributor contract for the United States region with a small Korean manufacture of capacitors name Shang-wa. Lester Electronics went public in 1984 and is now traded on the NASDAQ; its revenues approximate $500 million a year despite that Lester has never marketed domestic-made parts outside of the United States. Furthermore, Lester markets its products to small and medium-size original equipment manufactures, repair facilities and small local distributors throughout the Americas and Europe. On the other hand, there is Shang-wa Electronics, a capacitor manufacture founded by John Lin back in 1969. In business agreement in 1978 Shag-wa granted, exclusive right to Lester to sell its capacitors for 65 years as long as the there is a minimum annual purchase of $1 million wholesale (Shang-wa is the primary source of supplier for Lester). For the past 35 years such agreement which must be signed annual has serve both companies well. Therefore, John and Bernard consider themselves friends as well as business partners. In fact, John has had the opportunity to seat with the LEI Board of Directors and had informally suggested that Shang-wa is open to growth opportunities that could position the company to meet growing demands (University of Phoenix, 2007).
Economy continues to grow and companies seek for global opportunities, Shang-wa CEO John Lin is approached during an International Elect ...