Wealth maximization concepts

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MBA/540 Wealth Maximization Concepts Worksheet Assignment Week The first week’s assignment focuses on creating a worksheet you can use in planning to gain knowledge about key course concepts and to recognize application of those concepts in the real world. The assignment has three purposes: (A) identify at least five key theoretical concepts from this week’s readings, (B) relate each key concept to its application in an organizational setting, and (C) communicate well-researched information clearly, concisely, and in an organized manner.

Read the Lester Electronics, Inc scenario to identify examples of five or more key course concepts. Remember that the mind map is a source of these concepts. Then, read the assigned text materials to develop knowledge about the concepts. You may also wish to research these concepts through database searches in the University Library. This additional research will help expand your understanding of the text materials.

By completing the worksheet following the title page, you can begin to develop your research and written communication skills. The example below is from the MBA/500 course using the USAuto scenario. This example can be useful to understanding the assignment’s requirements. Please note that in describing the application of the concept, the worksheet should not contain simple one-word or even one-sentence answers. it should adequately demonstrate, in short paragraphs, careful study of the situations presented in the scenario, the simulation, and the reading materials.

Example Table for Assignment
Application of Concept in the Scenario
Reference to Concept in Reading
Distributive negotiations
USAuto’s negotiating team did not carefully identify AutoMex’s goals. USAuto’s goal was to reduce costs through utilizing AutoMex labor. AutoMex, by contrast, viewed USAuto as a source for developing its employees’ skill levels. USAuto’s negotiating team also approached entering the Mexican market similarly, unwilling to allow AutoMex access to the hybrid engine for AutoMex’s own production.

Both of these distributive approaches create win-lose situations and can lead to conflict, as compared to the win-win situations created by integrative negotiations (Kinicki amp. Kreitner, 2003, p. 504).

A distributive negotiation usually involves a single issue-a ‘fixed-pie’-in which one person gains at the expense of the other. For example, haggling over the price of a rug in a bazaar is a distributive negotiation, (Kreitner amp. Kinicki, 2003, p. 71).

Wealth Maximization Concepts Worksheet
Your Name Goes Here
University of Phoenix

Wealth Maximization Concepts Worksheet
Application of Concept in the Scenario
Reference to Concept in Reading

Global expansion

In the case, all the business organizations are interested in pursuing growth by taking advantage of the available global opportunities. TEC has been developing enough resources in order to conquer the global market at the same time that the French manufacturer Avral wants to expand to the United States aside from its European and Asian markets. Shang-wa and Lester, on the other hand, are contemplating on marketing components in other countries.

The move to expand globally creates a larger market base for business organizations allowing them to generate higher level of revenues.
Global expansion is a strategy by which companies enter operate in other countries through direct foreign investment, partnership, or exporting (Thomson 2002).

Plant relocation

During the 1950s when Bernard is still in the electronic manufacturing business ran by his family, the plant has struggled to remain competitive by relocating to Carolina in order to take advantage of the lower labor costs.

Relocation to sites with lower labor costs allows business organizations to increase their profits. With the labor intensive nature of electronic manufacturing labor cost is expected to comprise bulk of the direct operating expenditures.
Relocation of plant is often necessary especially if the new site allows the company to cut operating costs (De Witt and Meyer 1998).

Joint venture

Recognizing their established partnership for the past 35 years, Shang-wa and Lester are coming up with an agreement to establish a manufacturing plant overseas to meet the growing demand for their products.

Joint ventures are important in maximizing shareholder wealth as it allows companies to combine their resources for their mutual benefit.
A joint venture is a legal organization that takes the form of a short term partnership in which the persons jointly undertake a transaction for mutual profit. Generally each person contributes assets and share risks (Joint Venture n. d.).


In the case, both Shang-wa and Lester are facing offers to acquisition larger business organizations. Shang-wa receives a proposal of takeover from TEC while Avral also wants to acquire Lester.

Acquisitions can benefit TEC and Avral as it enables them to add companies which have built their own strengths in their portfolio.
An acquisition is a corporate action in which a companybuysmost, if not all, ofthe target company’s ownership stakes in order to assume control of the target firm.Acquisitions are often made as part of a company’s growth strategy whereby it is morebeneficial to take over an existing firm’s operations and nichecompared to expanding on its own (Acquisition 2008).

Capital expenditure

In the case, Bernard refers yet did not specify on the capital expenditure that Lester expects to be a better way to meet the increased demand. Though this capital expenditure remained vague, it is expected to bring shareholder wealth.

Capital expenditures allow companies to be more competitive. These also enhance their efficiency especially in manufacturing their products.
Capital expenditures are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This typeofoutlayismade by companies tomaintain or increase thescope of their operations (Capital Expenditure 2008).

Acquisition. (2008). Retrieved 21 March 2008, from
Capital Expenditure. (2008). Retrieved 21 March 2008, from
De Witt, B. and Meyer, R. ( 1998). Strategy: Process, Content, Context, 2nd ed., Oxford: International Thompson Business Press.
Joint Venture. (n. d.) Cornell University Law School. Retrieved 21 March 2008, from
Thompson, J. 2002, Strategic Management, 4th Edition, London: Thomson