Problem Solution Paper

Running head:   PROBLEM SOLUTION: LESTER ELECTRONICS

Problem Solution: Lester Electronics
University of Phoenix

Problem Solution: Lester Electronics
      LEI Electronics, Inc. (LEI) is electronics parts master distributor that markets its products to original equipment manufacturers.   LEI and Shang-wa Company have had an exclusive distribution for many years.   The CEO of Shang-wa is considering retiring and has begun to explore options to make it happen. Since there is no formal succession plans for the company’s management, Shang-wa’s CEO is considering the option of partnering with LEI. However, Transnational Electronics Corporation (TEC) is interested in acquiring Shang-wa which can quickly go from an interest to acquire to a takeover. If the TEC acquires Shang-wa, the distribution agreement between LEI and Shang-wa will come to an end. LEI stands to lose 43% of its revenues if it loses Shang-wa as a manufacturer. At the same time, LEI is also being propositioned to be acquired by Avral Electronics (University of Phoenix, 2008).
      A merger between LEI and Shang-wa would increase their shareholder’s wealth and give LEI a global presence and should increase their market standing. After analyzing the situation, LEI has to make a decision that will be best for the company that will increase the company’s value and maximize shareholders wealth. However, there are several issues that LEI will have to address as a result of the merger.
Situation Analysis
Issue and Opportunity Identification
      LEI goal is to expand and increase the company’s value and maximize wealth shareholders. In the current market, the environment has many of challenges ranging from hostile takeovers to increased competition. In the current situation, if LEI does nothing they will lose 45% of the company’s revenue over the next five years which would be the result if TEC acquires Shang-wa. After analyzing the current issues that LEI faces, a number of options were found that can... [continues]

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