Lester Electronics, Inc.
Gap Analysis: Lester Electronics
This writing will focus on the second part of the Lester Electronics, Inc. scenario and the financing opportunities that lie ahead for the newly merged company. It will highlight the issues and opportunities that are challenging the company, present the perspectives and dilemmas of the major stakeholders, give an end-state vision of a desired future state and provide an analysis that can help bridge the gap from its current state to its desired end-state vision.
Situation Analysis
Issue and Opportunity Identification
Bernard Lester is the founder of Lester Electronics, Inc. (LEI), a consumer and industrial electronics parts master distributor. Lester markets its products to small and medium sized original equipment manufacturers, repair facilities and small local distributors throughout the Americas and Europe. In 1978, Lester joined forces with a small Korean manufacturer of capacitors named Shang-wa Electronics. In this agreement, Lester became Shang-wa’s exclusive distributor of capacitors in the United States. This agreement has proven to be very lucrative for Lester Electronics, as the company has grew to earn $500 million annually and is traded on NASDAQ market with a rating of Baa by a nationally recognized rating agency.
John Lin, founder and CEO of Shang-wa Electronics, began manufacturing capacitors in 1969 in Korea. John has no formal education beyond grade school and worked his up from a janitorial job in a capacitor factory to the CEO of his own firm. In the contract with Lester Electronics, Shang-wa granted Lester the exclusive right to sell Shang-wa capacitors in the United States for 65 years, as long as Lester maintained a minimum annual purchase of $1 million wholesale. This has resulted in Shang-wa being the primary supplier of capacitors for the U.S. market. In exchange, Shang-wa cannot knowingly sell its capcitors to anyone intending to market to U.S. buyers. Now at age...
View Full Essay