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    Lester Electronics Benchmarking/Financing Alternatives Paper

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    Individually, identify and research two to three companies that have faced issues similar to those you identified in the scenario for Lester Electronics. For each company selected, discuss the following in synopsis: (1) situation facing the company, (2) how the company responded to the issue; and, (3) outcomes of the company's response to the situation. For example, if your three companies are ABC Co, BBD Ltd, and XYZ Inc there should be roughly three pages, one for each company, that provides the information identified. To avoid duplication of efforts, each team member should identify, to the team, the companies he or she will be researching.

    Based upon the information gathered from individual papers, the team will then prepare a three-to-four page paper that synthesizes the key findings. From the companies researched, identify the key course concepts, and compare and contrast the practices of each company related to those concepts. Appropriately cite all references used.

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    Solution Preview

    Davis + Henderson

    Situation Facing Company
    Davis + Henderson is the leading cheque printer in Canada and has built its reputation on over 129 years of experience supporting the cheque supply programs for Canadian financial institutions. Davis + Henderson offers a wide range of both personal and business cheque designs as well as co-coordinating accessories. They began to face strong competitions from similar companies. Many of these companies were smaller companies that were offering cheaper services to financial institutions. Although Davis + Henderson's relationship with its customers was pretty strong, these other competitions were beginning to infiltrate the market and attracting some of Davis + Henderson's customers.

    Company's Response
    To respond to this issue, Davis + Henderson began to consider acquiring another company that will help boost their image and reinforce their strategy (Davis + Henderson, 2006). However, their cash flow statement did not show enough money for them to take this action. The management team decided to perform a detailed and stringent cash flow analysis for an entire year. By conducting this analysis, they were able to find ways to improve their cash flow. They began to employ cost management techniques and implemented new programs that will attract new customers. Davis + Henderson also began to reduce their net investment in working capital. At the end of one year of performing a cash flow analysis, they were able to reduce their working capital by 29 percent. By reducing its working capital needs through efficiency gains, Davis + Henderson was able to generate some extra money. "The quality of a company's working capital management, as measured by the Flow Ratio, has an enormous impact on the company's ability to generate cash" (Yahoo Finance, 2006).

    Outcome
    Within one year of performing this analysis and monitoring their free cash flow, Davis + Henderson was able to acquire a company called Filogix. Filogix, a leading provider of information and transaction technology primarily for the residential mortgage and real estate market, was acquired June 15, 2006. "This acquisition advanced Davis + Henderson's strategy of being a leading service provider to the financial services marketplace by deepening its relationships with current customers and adding important new relationships" (Yahoo Finance, 2006). ...

    Solution Summary

    A benchmark of two companies as they relate to the Lester Electronics scenario. Benchmarking is focused on the concept of "Working Capital Strategies to prepare for long and short- term opportunities"

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