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Running head: PROBLEM SOLUTION: LESTER ELECTRONICS
Problem Solution: Lester Electronics
University of Phoenix
Problem Solution: Lester Electronics
Lester Electronics Inc. (LEI) is a consumer and industrial electronics parts distributing company that markets its products to small local distributors throughout the Americas and Europe. The company also markets to small and medium-sized original equipment manufacturers and repair facilities. In 1978 LEI entered into an exclusive agreement with Shang-wa Electronics, a small Korean manufacturer of capacitors, which gave Lester the exclusive right to sell Shang-wa capacitors in the United States. However, LEI must maintain a minimum purchase of $1 million wholesale annually. This contract has worked favorably for both companies for the past 35 years; however, intentions to acquire Shang-wa have been expressed by Transnational Electronics Corporation (TEC), a large manufacturer of electronics components. “If this happened, the long standing Lester/Shang-wa exclusive distributorship agreement would most likely not be renewed at year end, creating a 43 percent reduction in Lester revenues over the next five years” (University of Phoenix, 2008). Conversely, Avral Electronics, an electronic equipment and component parts manufacturer, has expressed an interest in acquiring Lester Electronics (University of Phoenix, 2008).
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. Both have vested interest in realizing this v ...