Lester Electronics - Gap Analysis

Lester Electronics - Gap Analysis

  • Submitted By: pinktoe26
  • Date Submitted: 03/19/2009 5:00 PM
  • Category: Business
  • Words: 2438
  • Page: 10
  • Views: 1


Gap Analysis: Lester Electronics
Shannon Wedderburn
University of Phoenix

Gap Analysis: Lester Electronics
A gap analysis is the “gap” between a situation in its current state and the situation, as we would like it to be. In management, this kind of analysis is used to find strategies to close the gap between the current state (the way things are) and a desired state (the way a company would like things). A process for carrying out a gap analysis is to compare past performance, current performance, and future expected performance.
Lester Electronics, Inc. a $500 million per-year company was created in 1978. At that time, Bernard Lester entered into an exclusive distribution contract with Shang-wa, a Korean manufacturer of capacitors. This agreement proved beneficial to both companies. As time has progressed, new business opportunities have arisen and both companies must evaluate their current position and their anticipated future position in the industry. Since a gap exists, a common approach in a gap analysis is to set up a matrix to show the issues and opportunities, evaluate the viewpoint of the stakeholders, and identify the end state goals.
Situation Analysis
The current state of affairs confirms Lester’s decision to pursue a merger with Shang-wa. The initial decisions will revolve around how the merger will be financed. The alternatives could be any combination of long-term debt bank financing, corporate debentures, secondary offering of common stock, offering of preferred stock, covert debt offerings, debt offerings with warrants, equity offering of convertible preferred shares, or use of cash in the retained earnings account. In order to construct a decision, identifying the issues and opportunities would be the next step in the gap analysis.

Issue and Opportunity Identification
The primary purpose of a gap analysis is to provide a company with insight into areas that...

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