Risk Analysis on Investment Decision
University of Phoenix
MBA 540
Stephen Goodman
Bernard Lester and the Board of Directors have an important decision to make regarding the future of the company. John Lin and his Board of Directors have important decisions to make as well. Bernard and John have had 30 plus years of business relations as well as a positive friendship between each other and their companies. This paper will discuss a solution to issues facing their companies; analyze risks associated with the decision, and mitigation techniques.
Considering the fact that Lester and John have offers pending to purchase their companies from large electronics distributors, they must devise a solution that will best benefit their companies from a financial and long term stability point of view. They must also consider their shareholders concerns. I have decided that the best course of action for Bernard would be to purchase Shang-wa and create a partnership with Avral Electronics S.A., if they can create a mutual agreement, and use them to distribute Lester/Shang-wa components globally. This decision will not only solidify the business relations between LEI and Shang-wa, but ward off any takeover attempts, move LEI closer to electronics manufacture and distribution industry leadership, and award John Lin the luxury of retirement if he so chooses.
The risks with Lester purchasing Shang-wa may be minimal but still worth noting. First, since the company does already have a working relationship the problem may lie with merging the two cultures. The management span at the top becomes much wider, which imposes new strains. The managers' chances of coping succes ...