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Problem Solution: Lester Electronics
Lester Electronics, Inc, a consumer and industrial electronics parts master distributor with distributors throughout America and Europe. The company entered into an exclusive agreement with Shang-Wa Electronics, a small Korean manufacturer of capacitors, to give Lester the exclusive right to sell Shang-Wa capacitors in the United States as long as the company maintained a minimum purchase of $1 million wholesale annually. Transnational Electronics Corporation (TEC) is a large manufacturer of electronics components and has expressed an interest in acquiring Shang-Wa. Avral Electronics, an electronic equipment and component parts manufacturer, has expressed an interest in acquiring Lester Electronics. Bernard Lester, CEO and founder of Lester Electronics and John Lin, CEO and founder of Shang-wa Electronics have built an amicable working relationship and have discussed the option of establishing a new capacitor manufacturing facility.
Situation Analysis
Issue and Opportunity Identification
Through its 35 years in a distributor agreement with Shang-Wa, Lester Electronics has grown its United States annual market revenue to $500 million. This has been extremely beneficial for both Lester Electronics as well as Shang-Wa. As a result of both of their success, both Lester Electronics and Shang-Wa have been approached with takeover offers. Some of the issues and opportunities that have presented themselves are; Lester Electronics will lose 43% of its revenue over the next five years if they lose their exclusive US distributorship agreement with Shang-Wa. Shang-Wa’s is that they are not currently in a position to stop a takeover from TEC and the ...