Gap Analysis: Lester Electronics
The merger between Shang-Wa and Lester face obstacles and potential pitfalls that must be carefully examined in order to prevent this plan from becoming a disaster. The first issue the companies are facing relates to financing. They must examine their abilities to obtain such financing and determine the resources each of them possess in order for to be successful. Secondly, the two must realize the challenges and the opportunities the merger could pose to each party. Shang-Wa and Lester must take into account present and future stock values, potential debts, and the cultural changes within the company. Most important, the end state goal for the two companies must be planned for and eventually met. The goal for the two is to have a successful merger and become a more profitable company for the owners and the shareholders.
Describe the Financing Problem at Hand
The financial situation between Lester and Shang-Wa is their abilities and resources to merge the two companies. Lester must determine the best financing options for a merger to take place with Shang-Wa. There are several alternatives and exploring each will help determine the best course of action. For Lester a merger is more beneficial than an acquisition since an acquisition can be costly and perceived negatively by investor and the company’s staff. A merger on the other hand can be perceived as an advantage and growth potential, in which neither company is perceived as to be having financial difficulties. In addition a merger, however, requires approval by the majority of stockholders from both companies and in this situation is the case with the long history of the two companies working together.
Issue and Opportunity Identification
There will be many challenges for Lester and Shang-Wa in both countries. Some of the challenges include the merger and stock value, debt, value of the merger, finance and cultural differences. With mergers the...