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In 1978 LEI entered into an exclusive agreement with Shang-wa Electronics, a small Korean manufacturer of capacitors, which gave Lester the exclusive right to sell Shang-wa capacitors in the United States. However, LEI must maintain a minimum purchase of $1 million wholesale annually. This contract has worked favorably for both companies for the past 35 years; however, intentions to acquire Shang-wa have been expressed by Transnational Electronics Corporation (TEC), a large manufacturer of electronics components. “If this happened, the long standing Lester/Shang-wa exclusive distributorship agreement would most likely not be renewed at year end, creating a 43 percent reduction in Lester revenues over the next five years” (University of Phoenix, 2008)...
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