Warren Electric Essay, Research Paper
The electronic distribution industry is one of the fastest growing and changing industries right now. One of the problems right now is that the industry is going into a direction that it has never been before. Massive acquisitions and mergers are causing a slight problem right now in this industry. One example of this is when three years ago the Cleveland-based Premier Industrial Corp was bought out by Farnell electronics plc of Britain. This company saw itself struggle with many problems spawned by falling share prices, a major CEO’s departure, and declining sales. Many of these problems had to do with the logistics of major corporations merging (Srikonda, 1999). Another problem is that there was a sales slump in the industrial electronics industry in the third quarter of 1998. Sales during this quarter rose seven percent, but manufacturers ordered less than the previous year. According to the Electronic Industries Alliance, sales began to slow during the spring and the trade group expected industrial sales to be flat for the year (Brack, 1999). The fourth quarter seems to be questionable depending on what companies you are looking at. Avnet, Inc. announced disappointing performance for their forth quarter and Arrow Electronics announced that fourth quarter earnings will be below analysts expectations. Kent Electronics and VEBA Electronics Inc. both had increased sales for the forth quarter (Walter, 1999).
Warren Electric seems to have jumped into the acquisition game with full force. Warren Electric’s latest acquisition was in 1997 when Warren purchased Watson Electric Company. Watson Electric joins Warren Electric Group’s existing Warren Electric Company, Warren Electric Telecommunications-Utility Company, Warren Electric of Louisiana, Warren Electric of Texas, Warren del Caribe and Thompson Real Estate (warrenelectric.com).
There are many suggestions that could be given to Warren Electric. One suggestion is that they need to be careful of the huge logistics problem that exists when acquisitions occur. Sales areas and integrated supply procedures could very well contradict each other in this ever-changing environment. Warren Electric needs to focus on their core competencies and increase value-added services to their customers if they expect to remain competitive in the electronic distribution field.