Issue and Opportunity Identification
Lester Electronics (LEI), a consumer and industrial manufacturer of electronic parts, marketing products to small- and medium-sized original equipment manufacturers, repair facilities, and small local distributors throughout America and Europe. LEI entered into an exclusive agreement with Shang-wa Electronics, a small Korean company, to allow Lester Electronics to sell Shang-wa capacitors in the United States. The agreement stands as long as Lester Electronics purchases a minimum of $1 million (wholesale) of products annually. Over the years, CEO’s John Lin of Shang-wa and Bernard Lester of Lester Electronics, have built a friendly relationship that has created success for both organizations. Most recently both organizations have been approached with acquisition offers which poses immediate action.
Transnational Electronic Corporation (TEC), a large manufacturer of electronic components, has recently expressed interest in Shang-wa. TEC’s history has proven to be swift and immediate in the organization’s actions. A hostile takeover is a type of corporate takeover which is carried out against the wishes of the board of the target firm. This unique type of acquisition does not occur nearly as frequently as friendly takeovers, in which case strategic alliances are formed that benefit both companies. Hostile takeovers, particularly those of the 1980’s involving corporate raiders like Carl Pickens, have given way to a more civilized takeover. “A tender offer is a public offer to buy shares of a target firm. It is made by one firm directly to the shareholders of another firm,” (Ross, et. al., 2004, p. 797). According to John Lin, TEC has been known to participate in hostile takeovers. John Lin of Shang-wa is interested in retiring and wishes to ensure the future success of the company that he has built. Lin is looking for a friendly agreement with another company, however, he is fully aware of the...