LINCOLN ELECTRIC'S APPROACH

Lincoln Electric's Approach to International Strategy Indian Market

Lincoln Electric's Approach to International Strategy

Lincoln Electric (LE) has been a producer of electric welding technology and since late 1800. The company remained primarily a family and employee held company until 1995, after approximately 40% of the capital went to the public. James Lincoln, one of the founders, developed unique techniques to effectively manage employees motivated. These management techniques are implemented as an unusual (for the time) the compensation and benefits structure called "management incentives." The incentive management system consisted of four key areas: working in factory production based solely on piecework, a year-end bonus that could equal or higher than an ordinary individual to pay, job security and limited benefits. Management successors to James Lincoln continues this philosophy with success even in difficult times. This incentive system Lincoln Electric provided a significant competitive advantage over their domestic competitors. This system of incentives, plus the bonus of Lincoln allowed employees to earn more than their counterparts in other companies, which contributes to employee motivation. A further aspect of Lincoln's incentive system was limited benefits. James Lincoln developed a company a minimum of benefits paid, which reasoned that less profit would be more funds available to the employee bonus and compensation. The incentive program successful and participatory management style provides an environment in which Lincoln plant could produce many times (up to three times, with half the staff) in a similar manufacturing plant. The program of employee participation and incentive program in the Lincoln were major contributors to its ability to maintain a solid reputation as a producer of high quality which has driven the brand loyalty.

When combined with the style accessible and participatory management, the culture of Lincoln was able to take advantage of changes of their employees. The management at Lincoln provided an environment where employees are free to make suggestions or complaints, these ideas became the changes and the changes became innovations. Such as making modifications to the computer running two to three times its original speed. Lincoln is still profitable for the significant contributions of these production efficiencies. An increase in production rates (with the same resources or less) amounts directly to: a greater return on investment, lower cost of goods sold, and the ability to do more with less (especially in the economic challenges). In general, there is a business approach the LE and the ability to harvest these innovations is Lincoln's real competitive advantage. Since 1995, Lincoln Electric controls 36% of U.S. $ 1.5 billion welding equipment market and supplies, where it is considered the main competitor.

Lincoln will have to overcome their lack of success in international business before, evidenced by plant closings in Germany, Japan, Venezuela and Brazil. Part of this success was limited due to lack of international experience and a lack of assistance, "sink or swim" corporate attitude. LE could not have been looking at a long-term and may have given up on these early ...