Lawrence Sports Alternate Benchmarking

Running head: LAWRENCE SPORTS ALTERNATE BENCHMARKING

Lawrence Sports Alternate Benchmarking

University of Phoenix

MBA 550 – Resource Optimization

Robert Armbrust, B.S., MBA

Online Facilitator

February 25, 3008

Introduction

In this paper, the learner will be able to identify best practices in working capital management in a given industry that impact financial, economic, and global environments on resource optimization. Working capital strategies to prepare for long-term opportunities, the purpose of cash budgeting, cash flow analysis, the risks and opportunities of working capital strategies, and the ethical implications of competing working capital alternatives will be identified by looking at how companies in other industries have addressed specific issues. The desired end state will be described by realizing the opportunities and addressing the challenges of Lawrence Sports.

Scenario Based Assignment

Due Monday: Learning Team – Lawrence Sports Benchmarking

After reviewing the Lawrence Sports simulation, you will identify several issues that directly connect to the concepts in the mind maps for weeks 1 through 3. In addition to reading the assigned text materials to develop knowledge about the concepts, a thorough master’s-level education requires the development of effective research skills. In this assignment, you will work collaboratively to create a rich source from which you will individually develop alternative solutions for Lawrence Sports. John Lin, founder and CEO of Shang-wa Electronics, is looking forward to smelling the roses. He is 68 and has a desire to retire. The ride has been good due to his relationship with Bernard Lester, CEO and founder of Lester Electronics. Due to his lack of continuity planning for the business his best course of action is to explore the options for selling the business. David Antone, CEO of Transnational Electronics (TEC) has shown an interest in acquiring Shang-wa.

If TEC acquires Shang-wa the long standing Lester/Shang-wa exclusive distributorship agreement would endanger the stability of Lester based on the contract not being renewed at year end. This lack of revenue would impact Lester by a 43% reduction.

The challenges exist for all the companies involved. Each CEO has his own agenda. Avral Electronics is stable and would like a United States market share. Avral Electronics could benefit greatly through a relationship or merger with Lester Electronics. TEC is in a growth mode using mergers and acquisitions as a means of growing in leaps. TEC could benefit greatly from the acquisition of Shang-wa. Lester Electronics is in a challenging position. By relying so heavily on the relationship with Shang-wa the company’s revenue stream is at risk. Shang-wa is at risk due to the lack of succession planning. Each company is experiencing success tied to a level of risk. To strategically manage that risk effectively is the challenge.

Each company has opportunities presented. As long as Avral Electronics has the capital and drive to build through an acquisition of a United States based distribution company they are poised for growth if managed effectively. TEC is in expansion mode and is eager for an option to gain Shang-wa’s market share. Lester Electronics could make the friendship into a marriage and merge or acquire Shang-wa. Up until this point it has been in Shang-wa’s interest to just partner. Now, it is time for the relationship to move to the next level. Shang-wa is in a position to join forces with Lester Electronics to increase market share and more efficiently manage business through reduced costs.

The problems in this scenario revolve around elevated risk brought on by over commitment to a supplier. The relationship between Shang-wa and Lester Electronics has been fruitful. Lester exploited Shang-wa and Shang-wa benefited from a high volume, exclusive relationship. However, now that Shang-wa’s founder and CEO, John Lin, has a desire to retire and has not planned for succession the relationship is in jeopardy. John Lin will look to pad his retirement and legacy to his grandchildren. Bernard Lester, CEO and founder of Lester Electronics, will see his business revenue reduced by 43%. Lester Electronics needs stabilize the supply chain issue. Due to his lack of continuity planning for the business his best course of action is to explore the options for selling the business. David Antone,