Benchmarking: Lester Inc.

Lester electronics has some difficult decisions to make. Some of these many choices are to decide whether to be consumed by a growing company like Avral Electronics to attempt to grow by collaborating with Shang-wa. Whether LEI chooses to merge with Shang-wa, acquire Shang-wa, enter into a joint venture with the construction of a manufacturing plant with Shang-wa, or be acquired by Avral Electronics, LEI must consider the impact of not making a decision and allowing Avral Electronics to make a strategic move, which may not be beneficial to LEI.

In the given scenario, Lester Electronics Inc is trying to determine the impact of TEC purchasing Shang-wa Electronics, one of its supply companies, with which they have an exclusive supply agreement. This agreement must be renewed annually and if TEC purchased Shang-wa, it is likely they would not extend the agreement. Additionally Avral Electronics is looking to expand their distributorship business in the United States and is looking to acquire Lester Electronics Inc. to achieve that goal. L-3 Communications acquired Titan Group including their substantial debt to help them expand their operations. Lester Electronics, Shang-wa, TEC, and Avral can all learn from the L-3 Comm take over of Titan. It appears that LEI has had a steady decline in cash and equivelants over three years reported from $53 million to $34 million. It appears that Avral Electronics has enough cash and capital, and to make an acquisition worthwhile for both companies. Lester Electronics, Inc. (LEI), is faced with the pressure of having to make key strategic decisions to ensure it remains a viable competitor within its industry or it loses out to competitors making strategic moves, which are detrimental to its viability. The company has acquired other companies that assist in the production of their products and companies that help in their growth. Martinrea's experience is applicable to the Lester scenario because Lester can use Martinrea as an example on how to position their company by acquiring other companies to make them a stronger company without fear of a takeover. This companies experience is applicable to Lester's scenario because collaborating with Shang-wa should have a strong impact on the company's stock value and add value to both firms. Lester Electronics could learn from the Schwan Food Company in this way by being away of its needs. In this case, the company decided to purchase a supplier to limit the amount of damage that could be done by the sale of the company to another firm. In the way they have benefited because it will allow Schwan and Lester to continue to be in control of there own destiny.

Another solution is to allow Lester Electronic to acquire or be acquired this is a similar challenge that Miller/Coors and Schwan/Mrs. Smith's is facing. Lester Electronics, Inc. can benchmark against the Miller Coors merger to identify the possible affects on stock price for the company. The company can also look at the positive aspects that a larger presence in their industry will have for Lester Electronics. This companies experience is applicable to Lester's scenario because collaborating with Shang-wa should have a strong impact on the company's stock value and add value to both firms. Lester Electronics can also learn from Mrs. Smith's who allowed themselves to be purchased by a larger manufacturing company and is now showing amazing growth. It is also a comfortable position for both companies and should show how to position itself for future growth. It is often difficult for a company to grow large amounts within the organization. In a case as this it may be easier to have an "insurance policy" available to that company so the company may continue to grow even in difficult times.

Like Lester Electronics, they collaborate with companies outside the US to produce and market their products. In the given scenario, Lester Electronics Inc is trying to determine the impact of TEC purchasing Shang-wa Electronics, one of its supply companies, with which they have an exclusive supply agreement. Because up to 45 percent of LEI's revenues come from an exclusive distribution agreement with Shang-wa, the acquisition of Shang-wa by Avral Electronics would have a serious impact on LEI's profitability. ITT Corporation is a global company that has manufacturing plants around the world and continues to expand their source of supply and market presence. Like Lester Electronics, they collaborate with companies outside the US to produce and market their products. They have business relationships in over 130 countries. ITT wanted to have a lager presence in the motion control market. One of their recent acquisitions was International Motion Control, a company with large global market. LEI must determine the best way to mitigate the expected 43 % reduction in revenues over 5 years with the loss of Shang-wa. This company's experience is applicable to the Lester Scenario because similar to Xstrata, LEI must decide on a strategy that will better position itself to avoid the loss of up to 45 % of its revenues (from Shang-wa), and consider which strategic mergers or acquisitions would best position itself for growth.

Because up to 45% of LEI's revenues come from an exclusive distribution agreement with Shang-wa, the acquisition of Shang-wa by Avral Electronics would have a serious impact on LEI's profitability. Therefore, LEI must make an immediate strategic decision to determine what is in its best interest. To continue the company's growth LEI must make a firm decision on how it wants to proceed in the future months. There are several directions that the company may chose to several of which are growth options for the small electronics firm.

Martinrea ThyssenKrupp

Martinrea International Inc. will triple in size after purchasing an automotive and chassis business from the Thyssen-Krupp Budd Company's. Martinrea's move to acquire ThyssenKrupp is to expand into the United States so their company can expand and grow their operations. Chairman Rob Wildeboer stated, "We believe these assets not only represent growth in the short term but will give us the base to grow will all our customers, existing and new, as they look for creative solutions from aggressive and financially strong suppliers," (Sherefkin, 2006). Martinrea is looking to grow quickly and to grow within the U.S. by this acquisition.

Lester Electronics must come to a decision as to where the company must go. Following the lead of Martinrea, Lester could look ahead as Martinrea has by finding a company that can be acquired and expand into new markets. Martinrea has been aggressive with their practices because the company also acquired Pilot industries in 2002. That acquisition was