Running head: GAP ANALYSIS: LESTER ELECTRONICS
Gap Analysis: Lester Electronics
Mia Randle
University of Phoenix
Gap Analysis: Lester Electronics
In 1978 Lester Electronics, Inc. (LEI) entered into an agreement with Shang-wa Electronics (SE) to develop an exclusive capacitor distribution contract (University of Phoenix, 2007). The agreement stipulates that SE will provide LEI the right to sell SE capacitors in the United States for 65 years. The agreement requires LEI to sustain a minimum annual purchase of $1 million and in return SE will not sell the capacitors to competitors within the United States (University of Phoenix, 2007). The agreement has been in effect for 35 years and has proven to be beneficial to both parties. Recent events have required SE and LEI to revisit their current business arrangement and the management team of LEI must carefully analyze their current financial position and long-term goals with the purpose of creating growth for the company. LEI is currently pursuing a merger opportunity with SE and seeking appropriate methods of financing the venture. The merger ‘refers to the absorption of one firm by another. The acquiring firm retains its name and its identity, and it acquires all the assets and liabilities of the acquired firm. After a merger, the acquired firm ceases to exist as a separate business entity,” (Ross, Westerfield & Jaffe, 2005, p.797). With the completion of the merger LEI and SE would establish combined financial and corporate initiatives that will include maximizing shareholder value simultaneously meeting to the needs of customers, suppliers and employees. The financing of this purchase will have a profound impact on the long-te ...