The Lester Electronics classroom scenario allows one to identify several issues that directly connect to the basic concepts of corporate finance. The following is a comparative analysis of corporations who have faced similar issues and dilemmas to that of Lester Electronics, and the synopses of the manner in which the concern was managed. This analysis will provide the reader, as well as the executives of Lester, with a source of alternatives with which to proceed. American Airlines – Eduard Hristache
American Airlines started on January 25, 1930 as a subsidiary of The Aviation Corp. and was engaged in the operation of an air mail transport system. On Sept. 25, 1950 Pan American World Airways, Inc. , acquired assets and business of American Overseas Airlines, Inc. , former subsidiary (62% owned). American, together with Continental Corp. , acquired Reservations World, a unit of Diner’s Club, Inc. In Dec. 1970, American and Continental Corp. liquidated business of Reservations World. On Mar. 8, 1971, merger of Trans Caribbean Airways, Inc.
was formally consummated, effective March 2, 1971. In December 1986, the company acquired approx. 80% interest in ACI Holdings, Inc. , parent company of AirCal Inc. , and thru subsidiary acquired Video Financial Services. In July 1987, AirCal, Inc. merged into American Airlines, Inc. On Jan. 1, 1991, Co. ‘s cargo operations became a division of the airline. Trans World Airlines’ routes between New York, Los Angeles and Boston, and London’s Heathrow Airport were acquired in May, 1991. On Feb. 23, 1999, acquired Reno Air, Inc.
and on April 9, 2001, purchased substantially all of the assets of Trans World Airlines, Inc. (TWA) The U. S. Postal Service and American Airlines had signed a 5-year service agreement on Sept. 20, 2006, potentially worth $500 million in revenue to American, which is the largest single contract ever awarded to American’s Cargo division. On August 30, 2007, the company will add nonstop service between Lambert St. Louis International Airport and Abraham Lincoln Capital Airport in Springfield, Ill. , beginning Nov. 4, 2007. Anheuser-Busch – Annette Fournier
After months of hard negotiations and unmet promises Anheuser-Busch, considered by most as the number one American Brewing company finally gave in to the hostile offer of Belgium Based Brewery InBev and its hard-line CEO Brazilian native Carlos Brito. The final bid that sealed the deal came in at $52 billion which is almost 13 times more the estimated value of the recognized Budweiser Company. Also, 45 out of the 52 billion comes from borrowed funds obtained by Brito as he presented his ambitious plans of making back the initial investment by introducing cost cutting initiatives into the American company.
However, this may prove to be easier said than done considering that most experts recognized Anheuser-Busch as the most efficient Brewery in the US. Brito in the other hand, is confident that cost reduction could come from changing extravagant behaviors adopted by top managers over the years such as: directing top executives to travel coach instead of first class whenever on company related business; take away employee incentives like receiving free admissions to the company’s theme parks as well as take away the two free cases of beer a month currently given to employees amongst others.
He also plans to close the commission gap paid to wholesalers from $1. 00 per case to . 85 cents which is what Miller and Coors pay its distributors. In addition, he plans to utilize Anheuser Busch as the catapult to launch his Belgium Brew in the United States while doing the same with Budweiser products and introduce them in Europe and Asia where the customers are craving a little taste of America. Although Brito’s ri?? sumi?? is impressive and many on the business world recognize him as a very capable leader the road ahead is going to be one with many obstacles and hard dealings.
These coupled with the fact that Brito is new to the American industry may prove to be too much to handle in the long run. Boeing – Anthony Capone There is a conceptual parallel between our class scenario of Lester Electronics, Inc. and an analysis of The Boeing Company. Boeing, of course, is the major American manufacturer of jet planes in the world, thus having a diverse array of assets, liabilities, and issues. The parallel comes in the form of financial growth opportunities. A wholly owned subsidiary of The Boeing Company is the Boeing Capital Corporation.
“Boeing Capital Corporation is a global provider of innovative financing solutions. Its primary mission is to support the other Boeing business units by arranging, structuring and/or providing financing to assist in the sale and delivery of Boeing products and services. ” (www. boeing. com) The most recent concern for Boeing, and the airline industry, is the surging cost of fuels and resources. Boeing’s innovative strategies have created the opportunity to maintain profitability, and even increase profit in some sectors.
“The Boeing Company has incorporated financial services as a key element of its strategy. ” (www. boeing. com) The aviation business is under fierce attack from some environmentalists as a despoiler of the planet by spewing carbon dioxide into the air. Boeing has responded by using a weeklong air show as a platform to press the message that it is not only striving to be green but is making great progress. “Boeing is pushing so-called “second-generation bio-fuels” as a potential power source for jets that could transform the environmental impact of aviation.
” (seattletimes. nwsource. com) Boeing has capitalized on a growth opportunity by developing a bio-fuel made from the byproduct of algae. The creation of this innovative technology advancement has brought positive press to The Boeing Company, increased stock values by almost 34%, and an increase in manufacturing orders. After a three-year boom in sales, the U. S. plane maker has 3,661 aircraft in its order book, worth more than $270 billion at list prices, to be delivered over the next six years or so. “Boeing Co.
said it has signed a deal with Air China for 15 777s and 30 737-800s. The deal is worth $6. 3 billion at list prices. ” (bizjournals. com) Lester Electronics, Inc. , faces the potential growth opportunity of tremendous sales and profit increases with the acquisition of Shang-wa. The scenario depicts a situation in which the decision to acquire Shang-wa is crucial to Lester’s solvency. The analysis of Boeing’s performance, and future expectations, shows that internal innovation also creates growth opportunities with which to capitalize.