Lei - Investment Alternative Benchmarking
Investment Alternative Benchmarking for Bernard Lester
Gateway, Inc
Bernard Lester, CEO of Lester Electronics, Inc. (LEI) feels pressured by Avral Electronics to sell the business and John Liu, CEO of Shang-wa is pressured by Transnational Electronics Corporation to sell as well. Therefore, the decisions of financing alternatives are paramount. Lin of Shang-wa recently proposed a partnership with.Lester of LEI to open growth opportunities to meet a growing demand and establish a new capacitor manufacturing plant in Asia (University of Phoenix, 2008). To capitalize on the business relationship that has formed over the years and strengthen the partnership to ward off take-over possibilities, it will be necessary for the CEO’s to consider a merger and the leadership teams of both organizations to find appropriate financing alternatives that optimizes their capital structure. They must make investments that will maximize the return on investment for the firm and shareholders (Ross, 2005). Gateway is an excellent benchmarking example of effective funding methods that can be adapted by LEI and Shang-wa.
In 1985, starting with a rented computer, a three-page business plan, and a guaranteed $10,000 loan by his grandmother, Ted Waitt, founded the company - previously called Gateway 2000 - in an Iowa farmhouse. His was “focused on marketing high quality personal computers with excellent service at a price that represented great value,” (Gateway, 2004, para. 2). By 1996, Gateway had grown into one America’s best-known brands by selling computers directly to the end user. Their expansion had been phenomenal, expanding internationally to countries such as Australia, Europe and Asia, which was made possible by its instructive operations in selling, finance, assembly, and delivery (va de Vliet, 1996). By 1999, the company was the first to sell custom systems directly to the consumer, form an ISP, offer Internet services, and receive an...
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