Assess Internal and External Growth Opportunities

Overall Analysis

Comparison and Contrast

Assess Internal and External Growth Opportunities

In comparing the situation between Sprint Nextel and LEI, many similarities appear. First of all, each firm found itself in a situation where competition threatened survival. For Sprint to grow, additional spectrum space was needed to build a competitive 4G network. For LEI, the potential loss of its primary supplier would cut revenues by almost 45% (University of Phoenix, 2008). For Sprint, the external growth opportunity was found in Nextel. Nextel held a strong subscriber base from the business consumer segment and provided the popular push-to-talk technology (“And then there were four,” 2004). For LEI, the external growth opportunity is to acquire its primary supplier and eliminate the risk of lost revenue.

To financially make these deals work, the internal financial structure must be analyzed. For Sprint, the deal was $35 billion worth of stock. The shareholders of Nextel received 1.3 shares of the new stock for every Nextel share held (“Sprint acquires Nextel,” 2004). For LEI, the proposal could include a portion paid in cash and a larger portion paid through LEI stock. LEI could retain earnings and reduce the dividend per share. In the last two years, the dividend per share has doubled. With the growth opportunity, stockholders may approve such a plan. Another example for LEI in terms of growth opportunities and cross-border growth strategies is that of DiamlerChrysler.

Challenges of Cross-Border Growth Strategies

LEI and DaimlerChrysler are two companies that have turned to acquisitions and mergers in an attempt to expand their business in the global market. Currently, an Exclusive Supply Agreement between LEI and Shang-Wa compares to a similar situation with Mitsubishi (supplier of dual-badge vehicles) and DaimlerChrysler. It was proven from this scenario that just because two organizations currently have ties, it does not necessarily mean that they should merge. Based on the following research, which records the failure of the DaimlerChrysler/Mitsubishi Motor merger, it is imperative that LEI consider their shareholders before attempting to acquire an overseas company. Before presenting to the board, the organization must prove through the financials, that they are currently producing dividends and that an acquisition would be an opportunity for growth and not a loss.

DaimlerChrysler demanded Mitsubishi Motor for an equity share of about 40%, because this would give DaimlerChrysler the veto power over important management decisions and make it the actual number one shareholder. When