Risk Analysis On Investment Decision

Problem Solution: Lester Electronics Inc.

Lester Electronics, Inc. is a financial service investment company. Currently, the company is facing several situations that offer problems as well as opportunities that need to be evaluated. There are different ways to approach defining the problems facing an organization; the focus needs to be on defining the problem correctly.

Lester Electronics, Inc. should look at their situation and options regarding the takeover by Avral Electronics, S.A., Shang-Wa and the hostile takeover by Transnational Electronics Corporation. Lester Electronics, Inc. and Shang-Wa's issues are related to the financial history of the corporations, while John Lin wanting to retire, which led into the current problem of other corporations wanting to take over the companies. This paper explores the challenges, opportunities and the ethical dilemmas that Lester Electronics, Inc and Shang-Wa is experiencing during their pursuit to prevent hostile takeovers.

Describe the Situation

Issue and Opportunity Identification

Lester Electronics, Inc. is facing two issues. The first issue is Shang-Wa, who provides more than 40% of the company's product, is facing a hostile takeover. Shang-Wa's outcome will affect Lester Electronics, Inc. The second issue is the attempted takeover by Avral Electronics, S.A. Shang-Wa is also facing two primary issues. Jon Lin deciding to retire with no one in mind to take over the company is the first issue. The second is the hostile takeover attempt by Transnational Electronics Corporation.

Lester Electronics, Inc. has several opportunities. They stated doing nothing is not an option. First, they could fight the takeover and strive to maintain the relationship with Shang-wa Electronics. Second, they could attempt to buyout Shang-Wa Electronics. Third, they can develop a business relationship with another capacitor provider. Fourth, they could yield to the takeover by Avral Electronics, S.A.

Shang-wa Electronics also has several opportunities. First, they can do nothing and continue the relationship with Lester Electronics, Inc. This option may prevent John Lin from pursing is retiring plans. Second, they can accept the hostile takeover bid by Transnational Electronics Corporation. Third, they can sell out Shang-Wa to Lester Electronics, Inc.

The issues include preventing any hostile takeovers, analyzing the information to make the best possible decision and preparing the staff for the potential outcomes. On the opposite extreme, this also proposes many opportunities for both companies. Shang-Wa's owner, John Lin has been looking to retire and is at the point of considering these decisions. Lester Electronics, Inc. would be able to expand into the domestic market if Transnational Electronics Corporation took over and they continued their relationship. If Lester Electronics, Inc. were to partner with Avral, their financial backing would be beneficial.

Lester Electronics, Inc. and Shang-Wa must make a rapid decision regarding their partnership and what the future holds for them. Each company must also consider how their organization could benefit from an outside organization and keeps the friendship out of the decision making process. These problems are worth solving as these men have both worked very hard to achieve success with their organizations. The opportunities are available to expand the businesses and even reach out to new markets. The catch is making the decision that has the greatest benefit to each organization.

Stakeholder Perspectives/Ethical Dilemmas

The key stakeholders of both companies include; the board members, CEOs, the employees, the customers, the potential new employees, the stockholders and Avral Electronics, S.A. and Transnational Electronics Corporation. The board and CEOs have the right to make decisions they believe are in the best interest of the corporation, even decisions some people might find ethically challenging. Closing the business or accepting a takeover offer impacts the business and the employees, especially Lester Electronics, Inc. as an American company with American jobs, values and ethics.

The ethical dilemma with this situation is that the CEO of Shang-Wa sits on Lester Electronics, Inc. board and has become friends with Bernard Lester. If this merger does not go well or Lester Electronics, Inc. decides to take a different path than originally discussed, Lester Electronics, Inc. board could be affected and the overall decisions could be tainted. This needs to be monitored closely by an independent third party.

Obviously, this is a very tough situation