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Gap Analysis: 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. Bernard's interests lie in the fact that the loss of Shang-wa as a manufacturer would result in a 43% loss in revenue over five years. John Lin is interested in planning for retirement yet has not groomed a successor and realizes that a joint venture would "enable both companies to meet growing demand for the niche product Shang-wa offers," (Scenario: Lester Electronics, 2). In addition, it would provide Shang-wa with the management talent and John Lin the long-term opportunity to potentially exit the business.
As the two companies prepare to merge, there must be careful consideration of the various issues and opportunities, along with the interests of the stakeholders and the ultimate ...