Mba 540

Running head: INVESTMENT BENCHARMING FOR BERNARD LESTER

Team Delta Learning Team Week 2 Assignment

Scott Myers

Sharon Stewart

Von Nelson

Larry Stafford

Lara Edna

MBA 540

University of Phoenix

Professor Brady

01 April, 2008

Table of Contents

Introduction Page 3

Internal and External Growth Strategies Page 3

Working Capital Management Strategies Page 5

Challenges of Cross-border Growth Strategies Page 6

Organizational Performance using Financial Statement and Ratio Analysis Page 7

Portfolio Management in Allocation of Corporate Resources Page 9

Conclusion Page 9

References Page 10

Team Member Synopsis Page 11

Scott Page 11

Shari Page 15

Von Page 20

Larry Page 23

Lara Page 25

Introduction

A company is a high performance organizational structure that is affected by internal as well as external forces; a company must align itself internally and externally in order to maximize its efficiency and potential to be successful in a business market. In the case of the Lester Electronics scenario, Lester Electronics, as well as its supplier, are in a position be acquired; this acquisition potential is from external market competitors and could be from a buyout or by hostile takeover. In order to learn of potential protection measures available for Lester Electronics and its number one supplier Shang-wa, Bernard Lester assigned his best research team at work doing benchmark research, in order to determine the best options for Lester Electronics and possibly for Shang-wa Electronics. These bench marking possibilities will be outlined as well as several topics of interest to Lester Electronics; these topics of interest include: internal and external growth strategies, working capital management strategies, challengers of cross-boarder growth strategies, organizational performance and portfolio management.

Evaluate Internal and External Growth Strategies

In the case of Lester Electronics and Shang-wa, both companies are at risk of being bought out by much larger and aggressive competitors. Internal and external growth strategies are important for all companies to implement; with the extra pressure on Lester and Shang-wa, strategies for growth also represent strength and independence. The situation is very similar to the situation Yahoo! Inc. is in right now; Yahoo!’s stocks are low, indicating low internal and external growth strategies. The demand for Yahoo! is low at a time when consolidations like AOL Time Warner is a model situation for many investors, some have Yahoo! in mind for acquisition. Yahoo!’s strategy to prevent a hostile takeover is for each current investor to purchase one share of common stock, should any group or individual accumulate 15% of yahoo common stock. This poison pill strategy is a last resort to prevent hostile takeover; however, the best way to prevent involuntary acquisition is to remain strong; this includes good internal and external growth strategies. Lester Electronics has had a good increase in income available to pay its investors, in the form of dividends (increasing from $6,707.00 in 2002 to $30,010.00 in 2004); increasing dividends is a good indication to investors of the strength of their investment. Shang-wa has also posted a large increase in income available for common dividends ($10,921.80 in 2004, up from $1,710.25 in 2002). From a stockholders perspective, the per share amount paid as dividend is important; as well as the investment potential. Lester and Shang-wa represents to outside investors. It is important to note that investors are not just investing in the current output of the company; they are also investing in the potential, intelligence and leadership of the company. Lester is investing in expanding by building distributorships in Europe as a way to provide expansion growth for the company; Lester should compare Lester Electronics with electronics company market returns as a health check, as compared to the rest of the market. Lester should take into account the “return statistics,” (Ross-Westerfield-Jaffee, 2004) for the electronics market and consider diversification in Lester’s own investing as a hedge against stagnation in the electronics market. For example, using the formula “mean=(R1+…

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