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Running head: PROBLEM SOLUTION: LESTER ELECTRONICS
Problem Solution: Lester Electronics
Telly Stanger
University of Phoenix
Problem Solution: Lester Electronics
Lester Electronics, Inc., located in the United States, entered into a contract with Shang-wa, the Korean manufacture of capacitors, to be the only distributor of Shang-wa products in the U.S. After nearly 25 years, LEI has grown into an industry leader within the U.S. With revenues exceeding $500 million each year, the publicly traded firm must now decide whether or not to should merge with another company, or lose its exclusive partnership with Shang-wa.
Situation Analysis
Issue and Opportunity Identification
In 1969 John Lin started a small, capacitor manufacturing company in Korea. Mr. Lin named the company Shang-wa and quickly established a market share in Asia. Within a few years Shang-wa had started expanding outside of Asia and quickly recognized the United States as a valuable market. In 1978, Mr. Lin entered into a 65 year contract with Bernard Lester that made Mr. Lester the exclusive retailer of Shang-wa capacitors in the U.S. market. This contract was valid, “as long as Lester maintained a minimum annual purchase of $1 million wholesale; as a result, Shang-wa [became] Lester’s primary supplier of capacitors…In exchange, Shang-wa agreed to not sell its capacitors to anyone intending to market to U.S. buyers” (Scenario). As the only seller of Shang-wa capacitors, Lester grew his business into a major competitor in the U.S. market earning approximately $500 million annually.
Over the past 35 years, the partnership between Bernard Lester’s company, Lester Electron ...