Lester Electronics Incorporated (LEI) a United States (US) capacitor distributor and Shang-wa Electronics, a South Asian capacitor manufacturer have had a contract for over 35 years to manufacture and distribute capacitors both in the US and South Asia. The agreement however is in jeopardy with the recent inquiries of two companies Avral Electronics and Transnational Electronics Corporation (TEC) wanting to possibly acquire LEI and Shang-wa. If this occurs however, LEI stands to lose over 40% of its income because the agreement would be nullified with an acquisition. However, because LEI and Shang-wa's owners are friends as well as business partners they have determined to merge their companies. This will protect the interests of LEI and Shang-wa and will less the threats from Avral and TEC (University of Phoenix, 2007). Lester Electronics is facing some major challenges because they may lose one of their biggest suppliers, Shang-wa, who is responsible for almost 45% of their revenue. Moreover, Lester Electronics is also being pursued by Avral Electronics to expand Arval's distribution network in the US market. In a situation like this, companies can often learn from other company's examples in similar situations. One of the companies Lester Electronics can look up to is Amazon and how Amazon developed a relationship with Borders six years ago which has helped Amazon tremendously in improving their awareness in the industry. The first concern that Lester should consider is checking whether or not they have enough financial capacity to carry out the merger with Shang-wa. The financial managers of Lester need to evaluate the company's cash flows to know if they have enough money to either buy Shang-wa with existing equity or to f... ... middle of paper ... ...l logistics. They will have to evaluate customer needs in different regions of the world, find manufacturing and distribution facilities, and look for ways to keep the labor cost low. The competition is one of the major strategies that need to be evaluated. LEI will have to look at its’ competition worldwide and find out what they are offering. Knowing what the competition is doing will enrich LEI with information that will give the company a better outlook on the technology worldwide and the strategies the competition is pursuing. The company will have to calculate the NPV and IRR and see if globalization will bring them the cash flow that they are looking for. “Much of the information we obtain is in the form of accounting statements, and much of the work of financial analysis is to extract cash flow information from accounting statements” (Ross, et al., 2005, p.7).
Reject the proposal of Express. Prepare for the competition of Express by launching aggressive marketing campaign to match the price of Express in short run. Maintain and improve gross margin on BAS sales by leverage the strong relationship with supplier to get the lowest price. Continue improving the value added content, short delivery lead time and inventory management as main values of the company. Aggressively invest R&D to provide an on-line booking and ordering system to further improve customer’s time-to-market, facilitate the BAS sale order; provide the customer “efficient, low price, one-stop-shop” experience that will differentiate A/S from competitors. Focus on VA sales and improve the service, consistently grow sale volume of VA content.
To conclude, these issues are holding back the firm from being able to sustain profitability to a great extent. If these are resolved, then it can help the firm to form an overall profitability as each of its subsidiaries will contribute to be profitable by functioning only in the packaging sector or exploring new markets.
This case is about Star River and how the firm is in the middle of financial crisis that was induced by rapid growth. The CEO basically wants to improve the financial health of the company and ask for help to make some decisions. The CEO asks one of the analyst for help in reviewing the historical performance of the firm, forecast financing requirements for the next two years, exercise the forecasting model to identify the key drivers of the assumptions, estimate Star River’s weighted-average cost of capital and lastly to analyze the proposed investment in a packaging machine.
In our days mergers and acquisitions are a predominant feature of the international business system as companies attempt to exploit new market opportunities and to strengthen their market positions. Each year sets a new record for the total value of mergers and acquisitions and nearly every day new announcements are made in the business newspapers.
In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1).
Obviously, this case aims to evaluate Joanna’s analysis. Throughout the analysis, we will estimate the cost of debt, cost of equity, and cost of capital through different financial analysis models.
Red – Electronics Retailers (Competitors) - When I think about Electronic Retailers I generally think about; cellphones, laptops, digital cameras, printers, DVD’s, and gaming consoles. But, being the leading carrier of these electronics, I have always used BestBuy personally. Not only because I’ve been doing the research on this project for class but, I’ve always done business with this company when
One can use SWOT analysis as a major tool to identify factors affecting the competitiveness and viability of each firm before the merger takes place. The intent is to provide the information base to support clear and focused decision making. Exhibit 1 provide...
Caterpillar Inc. - Strengths and Weaknesses Caterpillar Inc., sought to better determine customer demand by leveraging the Internet. Using i2 Demand Chain Management, Caterpillar created an online dealer storefront that is accessible to both dealers and end customers, and the company has expanded its sales coverage, reduced the cost of sale, and increased productivity. Caterpillar’s Building Constructions Product Division needed to predict and rapidly respond to customer demand. The company wanted to empower its dealer network to provide the highest levels of service to the end customer. Company executives knew that the Internet was critical to their strategy. Caterpillar wanted to leverage the Internet to provide more visibility into customer buying habits. In doing so, it could save millions of dollars in inventory by building and configuring those products that customers demand, rather than stocking excess inventory. The company wanted to promote specific product lines and associated work tools using a combination of traditional (dealer) and nontraditional (Internet) channels th...
Hammond Cards, Inc. is a small player of the greeting cards industry in the United States of America due to the fact that their annual revenues equate to less than 1% of the industry leaders as described in the case. In their effort to stimulate growth, however, Wendy Hammond has employed me to analyze the potential acquisition of another company, Creative Designs. My analysis will firstly look at the main issue behind this acquisition and then further break it down into sub-issues that I will address individually. Since both of these companies follow a different strategy I will evaluate the two different companies and discuss the implications of their strategies on the merger. I will then perform various cost analysis to determine the cost structures of the two firms which will help me identify whether Wendy’s intentions can be carried out. In my analysis I will aim to figure out the practical capacity of the firms and get an indication on whether their current operations are using the optimal level of capacity and minimizing waste. This data will help me with my strategic recommendation of acquiring Creative Designs and fitting it in with the current strategy of Hammond C...
There is a range of criteria relevant for a decision of financing a new venture. To construct my list for the evaluation of a new company as an opportunity I have selected to refer to t...
Investing or venturing into the international market involves critical analysis of the internal and external environment in which the company operates. Usually, a company will decide to venture internationally due to a saturated market or fierce competition in the current country of operation. The demand for a company’s products may have diminished as a result of an economic crisis thus the company will target a foreign market to sustain its sales. In other words, the firms expand internationally to seek new customers for its products. For example, the current Euro zone crisis led to low demand in Europe and many companies extended their businesses to emerging markets where demand was high. A company may also venture in the international market to enhance the cost-effectiveness of its operations especially for manufacturing companies that will benefit from low costs of production in developing world. Global expansion is a long term project as it involves demanding logistics to be successful. Thorough research must be undertaken to ensure that the expansion will create value for share...
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
Amazon.com was a venture into an emerging market of internet and had to face hidden and unexpected hurdles in order to survive and excel in the market. Therefore, Amazon.com kept modifying its strategies with their focus on enhancing customer experience of online shopping and to delivery exceptional services with complete convenience to their customers. One of the major strategic decisions was to compromise on cost saving stragegy when Amazon.com started to maintain its own warehouses in different countries in order to ensure timely and accurate delivery to their customers
In logistics, the focus is on customer. When planning for the logistics function, firms consider the needs of the customer first. The customer’s goals become the logistics provider’s goals.