As demonstrated by the Lester Electronics scenario, the following eight benchmarked companies were tasked with the responsibility of maximizing shareholder wealth. Lester Electronics was presented with three troubling situations that required action or inevitably change the company’s future course. The pending events are: (1) Lester Electronics has been approached by Shang-wa Electronics, their foreign supplier, offering a joint venture, (2) Lester Electronics may accede to be acquired by Avral Electronics, S.A. and lastly, Lester Electronics may lose an exclusive distribution agreement if Shang-Wa is taken over by Transnational Electronics Corporation. LEI must consider each aspect when deciding the proper course of action. It is expected that through this generic benchmarking study Lester Electronics may identify the optimum strategy and obtain the proper funding to maximize the potential investment.
Evaluate internal and external growth strategies
Internal growth strategies rely on efforts generated within the firm itself, such as new product development, or by geographic expansion or globalization. The distinctive attribute of internally generated growth is that a business relies on its own competencies, expertise, business practices and employees to find new ways to grow. As a result internally generated growth is often referred to as organic growth, because it does not rely on outside associations or contributions.
External growth expansion relies on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing and franchising. An entrepreneurial firm can grow externally by acquiring other firms, engaging in alliances and joint ventures, licensing proprietary assets to other firms, or through franchising. The use of this strategy is becoming more prevalent, as firms increasingly rely on acquisition and strategic partnership to stimulate growth.