Running head: PROBLEM SOLUTION: LESTER ELECTRONICS
Problem Solution: Lester Electronics
The goal for any company to remain viable is to simultaneously maximize firm wealth and benefit the shareholders. Lester Electronics, Inc. (LEI) is at a pivotal junction where a merger with Shang-wa is imminent. Growth strategies, risk identification and mitigation techniques, and different methods of financing must be evaluated in order to ensure a successful merger. Bernard Lester, CEO of LEI, must be attentive to the rights and interests of the stakeholders and properly identify the issues and opportunities present surrounding the upcoming merger. End state goals must be stated with attention paid to ethical issues that may be present and with a focus on implementing measures to prevent the same issues from repeating. Alternative financing solutions must be evaluated in order to reach the optimal solution for the completion of the merge with Shang-wa.
Situation Analysis
Issue and Opportunity Identification
John Lin of Shang-wa is ready to retire and wants to leave his company in good hands. Bernard Lester stands to lose up to 40% of his company’s revenue if he loses his key supplier, Shang-wa. The opportunity for LEI is to propose a merger with Shang-wa with a strong foundation of sound financial planning. “The basic elements of financial planning comprise (1) the investment opportunities the firm elects to take advantage of, (2) the amount of debt the firm chooses to employ, and (3) the amount of cash the firm thinks is necessary and appropriate to pay shareholders. These are the financial policies that the firm must decide upon for its growth and prof ...