Lester Electronics Financing Solution Paper
Lester Electronics Financing Solution Paper
The decision to merge with Shang-wa is an important milestone at Lester Electronics Incorporated one that has led to the creation of many goals and expectations for the business. The following proposed solution was designed to assist Lester Electronics Incorporated accomplish its goals while focusing on providing the maximum wealth for Lester's shareholders through an optimal financial alternative.
Situation Analysis
In the Bernard Lester scenario Lester Electronics, Inc. and Shang-wa Electronics were both Corporations started from humble beginnings and both founders of the companies are Chief Executive Officers (CEO) of the businesses. Shang-wa Electronics entered into an exclusive supply agreement with Lester Electronics, Inc. Because of the agreement, Shang-wa is Lester Electronics primary supplier of capacitors for the U.S. market. The two companies entered into a general partnership. "In a general partnership all partners agree to provide some fraction of the work and cash and to share the profits and losses. A partnership agreement specifies the nature of the arrangement. The partnership agreement may be an oral agreement or a formal document setting forth the understanding," (Ross, Westerfield & Jaffee, 2005, p. 11). Ford Motor Company and Firestone Tire and Rubber Company, like the two companies in the scenario, also entered into a partnership. The partnership between the two companies lasted until 1996, when several state agencies in Arizona began having major problems with Firestone tires on Ford Explorers.
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