Gap Analysis for Lester Electronics and Shang-wa
University of Phoenix
December 1, 2008
Week 4 Assignment
Value creation must be linked to financial planning. The content of this paper is focused on communicating the importance of informed decisions designed to create sustainable competitive advantage. The course scenario is used as the basis for our discussion, and the subject is a proposed vertical merger between a distribution company Lester Electronics Inc. and a manufacturer Shang-wa. Through this example, a gap analysis is performed on the project that includes issues and opportunity identification, stakeholder perspectives/ethical dilemmas, an end state vision, the gap analysis and a conclusion.
Lester Electronics Inc and Shang-wa Electronics have been doing business together since 1978. The two firm’s have a million dollar exclusive minimum wholesale agreement with each other, which has developed into a lucrative professional relationship. Recently, both entities have been approached as interests for acquisition, which led to accelerated thoughts of a potential merger. The fact that Mr. Lester owns a distribution company, and Mr. Lin a manufacturing company, could yield tremendous synergies from the vertical consolidation. Although the men are close to retirement age, the venture would establish a stronghold along with creating interconnectedness necessary for strategic sustainable competitive advantage.
The new capacitor manufacturing facility is tentatively planned for a neighboring Asian county, where the project could take advantage of cost leadership. Depending on how well the plan is designed to adapt to cultural and currency exposure, the joint venture could flourish. Time is of the essence for the merger, due to pressure from TEC (Transnational Electronics Corporation) a distributor of electronics components, and an acquisition offer by Avral Electronics (a financially strong electronics equipment and component...