Investment Alternative Benchmarking for Bernard Lester
Lester Electronics (Lester) finds itself faced with a difficult decision after years of profitability and growth due in large part to its long-term relationship with Shang-wa (University of Phoenix, 2008.).Threatened with the loss of its exclusive distributorship of Shang-wa capacitors, it must decide whether to recommend a joint development with Shang-wa, the acquisition of or merger with Shang-wa, or a takeover by Avral Electronics, S.A.
Hawanini and Viallet (1999) believe that “the ultimate objective of financial management is value creation” and that “managers should manage their firm’s resources with the objective of increasing the firm’s market value.” Companies can increase their value through investment in growth opportunities (internal and external), sound management of working capital, and the careful allocation of resources across a portfolio of projects and activities that are most likely to deliver the expected returns at the desired level of risk (Ross et al, 2005). This paper examines the efforts of 10 companies to measure and increase value and which might offer a solution for Lester.
Analysis of Key Findings of Benchmarked Companies
Evaluate internal and external growth strategies
Internal growth strategies rely on efforts generated within the firm itself, such as new product development, or by geographic expansion or globalization. For example, Ford, Microsoft, and Allstate, grow almost exclusively through internal growth strategies. The distinctive attribute of internally-generated growth is that a business relies on its own competencies, expertise, business practices and employees to find new ways to grow. As a result internally generated growth is often referred to as organ ...